Investing Is Hands Down The GREATEST Wealth Creation Tool On Earth

You’ve likely heard how powerful compounding interest is. You’ve also likely heard people who “wished they started investing earlier.” The goal of this article is to clearly articulate just HOW important investing is, how significant of an impact it can have on your wealth, and some SIMPLE ways to maximize your utilization of it. Investing has completely changed my life.

I grew up with a single mother who struggled with money and became a millionaire before 30. Now I’m in a position to take care of my mom and cover her expenses. All through investing.

First, let’s use an example to set the stage. I want you to focus on 3 things: 1. Notice how much saving helps increase your returns early on; 2. Notice how important it is to maintain consistent returns; 3. Notice how a small percent return can make such a massive difference with larger sums of money.

1. Notice how much saving helps increase your returns early on

• With a $5,000 initial investment, at 10 percent return over 20 years, and no additional contributions we’d have $33,638.
• The same scenario, adding $100 saved per month yields $102,368 a 204% greater return.

2. Notice how important it is to maintain consistent returns

• Review the table below and take a look at Portfolio 1 vs Portfolio 3.
• P1 has a 1.2% lower average return than P3 - yet it has a higher CAGR and better return on invested capital. Consistency matters. Reducing drawdowns matters.

3. Notice how a small percent return can make such a massive difference with larger sums of money

• When we’re looking at smaller amounts of money, 1% isn’t that compelling. However, with larger sums of money, even a small percentage can equal a meaningful amount of money.
• $1,000,000, at 15 percent over 10 years yields $2.0M. At just 16%, it yields $2.2M.
• That extra percentage point gave you an additional $200,000.

Takeaway: Compounding returns are powerful, the more we can save early on the sooner our principal gets to powerful amounts of money where compounding can really take over. Consistency in returns can outperform higher average returns. Small return gains can yield large sums of gross dollars.

So, how can we best take advantage of investing? Simple. Start. The best time to start investing was a decade ago. The second best time is today.

Erik is a Marine veteran, derivatives trader (options & futures), real estate and angel investor. From his start in the stock market in 2007, he’s dedicated over 30,000 hours to investing and trading. Despite growing up poor, he became a first generation millionaire before 30 though: planning, saving, investing, diligent and disciplined execution. Erik is active on social media and shares his investing and trading experience without the BS and a dash of humor, you can learn more about him at his webpage: www.esinvests.com. Don’t forget to subscribe to his YouTube channel: www.youtube.com/esinvests, follow him on Twitter: www.twitter.com/esinvests, and sign up for his free weekly newsletter, Outlier Insights at https://esinvests.substack.com/.

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