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Discover the Power of Compound Growth: See How $100 Can Grow in a Lifetime
While $100 may not appear significant at first glance, its potential for substantial growth becomes apparent when considering its returns over a lifetime.
Let’s embark on a hypothetical journey: imagine someone you know, perhaps your parents, invested $100 in a particular asset or commodity back in 1970, looking ahead over a span of 54 years, which coincides with an average human lifespan.
Now, let’s explore the worst-case scenario: if your parents simply kept the $100 bill untouched, its value would have grown to $956. However, due to inflation and an expanding money supply, its purchasing power would have significantly diminished over time.
But let’s look at more optimal investments. If they decided to channel their $100 into real estate, with an average annual return rate of 5.5%, their initial investment would have prospered into $1,542 by now. Alternatively, choosing US 10-year treasury bonds would have resulted in a value of $2,286 in today’s terms.
For those who opt for a reliable hedge against inflation, gold would have been an attractive choice. The initial investment of $100 would now be worth $5,545 in 2024. Likewise, investing in corporate bonds, issued by corporations to raise funds, would have multiplied the initial $100 to $7,775.
Now, let’s consider the best-case scenario investment. If one decided to endure various economic crises, such as the dot-com bubble and the 2008 financial crisis, and remained steadfast in the stock market, the rewards would have been substantial. Specifically, investing $100 in the S&P 500 index five decades ago would have grown to an impressive $22,419 in your bank account, contributing to a robust annual return of 11.3%.
These examples highlight the significance and benefits of investing, offering protection against inflation and the potential for remarkable returns. However, it’s important to note that investing comes with risks, and the content presented here should not be considered investment advice. Always be cautious and aware that when investing, your capital is at risk.