By Dr. Harry Hamann (MBA), August 10, 2021

Perspective on Investment Returns.

Compound interest is the investor's best friend. How to build wealth? Patience and Discipline. Compound interest takes time to fully work out, for this reason I explain in another article, why a long-timeframe is the investors best friend. Let us look at some numbers. Annual investments of $13k over 20 years at 8% per year (e.g. public stock index) results in a net worth of over $500k (big picture numbers; exact assumptions influence end result, e.g. tax rate on returns).

Just for fun:

  • 16% per year -> over $1M
  • 25% per year-> over $2.4M
  • 50% per year-> over $27M
  • 75% per year-> over $266M
  • 100% per year-> over $2.1B

Not possible? It is. Here is some perspective on investment returns from the great's (I try to study them all):

Realistic to achieve that for the average retail investor? Of course not. Can only the great's achieve such returns? No. There are unknown private investors that achieve similar returns, and most have never heard of them. Why? They don't want attention. They exist in greater numbers than you might think. Chances are, they exist in the city you live. They exist in other fields besides public stocks too (e.g. private stocks, real estate, ..). Can the average retail investor achieve 8%? Yes. Can the average retail investor achieve more than 8%? Yes.

Can the average retail investor achieve a net worth of more than $1M over her/his lifetime? Yes. Do you need to have super high income to achieve that? No. The $13k annual investments in the example above can be made easily by someone that earns roughly $50k p.a. (after deducting taxes and living cost). How to achieve this? With some know-how and a proven system.

Can anyone understand this and implement this? I am 100% convinced of it. The problem is a lack of financial education, a lack of a repeatable method and common psychological mistakes. There is a solution for all three things. Should everyone invest? In my opinion, every human on the planet should invest (reasons: currency devaluation, pension crisis/demography, etc.). It really does not matter what background you have. Only requirement: taking some initiative and the willingness to learn.

Best regards, Harry

PS: there is much more out there than public stocks or real estate. You just need to look. Follow the money (rich people) and you will learn

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