The foolproof way to become a millionaire

Everybody wants to be a millionaire overnight. Nothing wrong with it, but there is a foolproof way to become a millionaire on the side if you’re patient enough.

One of the most powerful tools you can use to your advantage is compound interest. In simple terms: interest on interest.

To make it more tangible we will create an example with the compound interest calculator

Let’s say we set aside €500,- to invest every month (pretty reasonable isn’t it).

We will use an average yearly return of 6% per year. (The S&P500 has an average return of 8% for the last 50 years, so again a pretty reasonable yearly return)

If you invest this monthly amount and start when you’re 20. 40 years later when you’re 60 you’ll have €933K in your bank account.

The earlier you start the more powerful you can make the compounding. For example, if you invested the same €500 per month for 10 more years…

The final outcome would almost double:

• 40 years: €933.000

• 50 years: €1.700.000

The beautiful thing is that you don’t need to be a genius investor to reach these results. Any average Joe can invest in the S&P500 for 40 years and become a millionaire. (The 8% yearly return will compound to 1.5 million in 40 years)

Action steps: play around with the investment calculator for a bit. It’ll show you the math behind compound interest and how you can use it to your advantage.

Keep improving 👊

Ivan