The questions and answers here are presented just to answer some questions about compounding. It is not meant to impress upon the investor that there is a certainty that we could turn $1.00 to a million dollars at a given time. Please read the Investing FAQ and the Disclaimer carefully so you won’t have any misconceptions.
Is it really possible to grow $1.00 to a million dollars ?
Of course it is. This is not so much a question of certainty, but a question of time. In fact if you placed $1.00 in a time deposit account, it would grow to about $1,027,566.37 in 462 years. So it’s not a question of is it possible, but a question of how to grow it in a short period of time.
Realistically, what is the ideal rate of return to grow 1 dollar to a million dollars in a lifetime and how many years does this take ?
Well, to grow 1 dollar to a million dollars to, say in 20 years, it would take a consistent, annual compounded rate of return of 100 % per year. This is next to impossible. Nobody in this world, no matter how good an investor is would be able to deliver this.
The realistic above average rate of return is somewhere from 15 to 25 % per year. This has been achieved by several investors such as Warren Buffett and even ordinary individuals such as Grace Groner. So let’s play around with these figures.
If your rate of return is a consistent 15 % per annum compounded, it would take close to a 100 years to grow 1 dollar to a million dollars. Not really feasible, because only a few people lived up to 100 plus this also assumes that you already invested 1 dollar when you were 1 year old. So this scenario is completely not realistic.
If your rate of return is a consistent 20 % per annum compounded, it would take approximately 76 years to turn a dollar into a million dollars. Sort of possible but not very realistic since most people start to invest when they are in their 20s or 30s, add up 76 years and you get 106. May be possible for some but not for most.
If your rate of return is consistent 25 % per annum compounded, it would take about 62 years to grown a dollar into a million dollars. This is more likely as this is very achievable in terms of rate of return and time.
So the perfect setting to turn a dollar into a million dollars in a “lifetime” ( 50 to 60 years) is to have a consistent rate of return of somewhere from 20 to 25 % or more compounded per annum.
How is this possible ? How is it possible to grow a dollar into a million dollars ?
This magic is called compounding interest. Albert Einstein was said to have called compounding interest as “the most powerful force in the universe.” To understand more about compounding interest, watch this interesting video on the Rule of 72 which is a simplistic rule to let you understand more about compounding interest. You could also read more about the Rule of 72 here.
There are lots of vehicles of investments that could grow your money, but in my own opinion stocks are the best among all of them. Click here to learn more about why stocks are the best investments. Others are risky but with high rewards investment alternatives include Forex and derivatives among others.
If you want to know more about stocks, you might want to watch the youtube video below or click here to visit my stock market investing blog.
Cool ! I want to invest my one dollar now ! How do I start ?
At the right side bar click on the Orange “PAYNOW” Button and Paypal will process your payment. Read the Investing FAQ if you have more questions.
Should you wish to invest more than $1.00 use the contact form to contact me to signify your intention to invest more than $1.00.