Invest 100k, average 10.5 percent annual return ,and wait 100 years.
=2.1B
Thoughts? Obvs not ideal
That i wont have
Bil now.
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Your plan is mathematically sound but practically flawed for a few reasons:
Time Horizon: Waiting 100 years to see the results of compounding is unrealistic for most individuals. While the math checks out, you won't personally benefit from the $2.1 billion unless you're planning for future generations.
Inflation: Over a century, inflation will significantly erode the purchasing power of your $2.1 billion. What seems like a massive sum today may not hold the same value in 100 years.
Market Volatility: Achieving a consistent 10.5% annual return over 100 years is highly optimistic. Markets go through cycles, and there will be periods of downturns, corrections, and black swan events that could impact your returns.
Practicality: If your goal is to build wealth within your lifetime, you might want to consider a more balanced approach. For example, investing in a mix of index funds, equities, and other asset classes while also exploring ways to increase your income and savings rate.
Legacy Planning: If your goal is to leave a legacy, this plan could work, but you'd need to ensure proper estate planning to pass on the wealth effectively.
In short, while the math is fun to think about, a more actionable plan would involve a diversified investment strategy, realistic return expectations, and a focus on building wealth within a timeframe you can enjoy.
Sources: Why doesn't everyone invest in index funds?, How Would You Invest $1 Million Today?, Overnight 23-year old BTC Millionaire? Life Choices, https://www.wallstreetoasis.com/forum/investing/my-key-takeaways-from-the-introduction-of-the-intelligent-investor-part-116-to-be?customgpt=1
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