This is the real plan, it can be achieved with seriousness and perseverance, without too much super mutation.
Capital: 20k USD, this is the recommended capital to start.
Target: 1 million USD (X50 times growth)
Method 1:
Stock investment with an estimated performance of 30% per year, within 15 years will reach the goal. This is the method of going one way, taking even steps.
Method 2:
Invest in coins at the appropriate time, with a goal of about x2 or x3 capital (1 year). Then switch back to investing in stocks at 35% per year, it will take about 10 more years to reach the goal. This method uses risk taking in the early stages, reaching a certain amount of capital then lowering the risk to a safer method.
The number 10, 15 years seems too long. It makes people run after risky quick plans. It's not just a matter of time, they don't believe in that path anymore.
Simply put, the plan is: Accumulate capital of over 20k USD. Find the most viable 30% accumulation method and implement it over the long term. Given enough time, you will reach your destination.
1 million USD is an amount many people have/will achieve. What is the difference here? That's the process to create that 1 million USD. The sturdier it is, the larger this number will be. If it comes more from the element of risk and opportunity, the number will stop quickly, or even decrease. The 1 million USD milestone is only a temporary milestone, not a reasonable goal in life. You will go much further once you master the process, and reach larger amounts of money through management.
Use money as a second worker
Many people when participating in financial investments (Coin, stocks) have made this mistake. The feeling of making money too quickly (easy) has led them down the wrong path. This mistake is specifically as follows:
Investment views are not accurate. Investing must be a parallel work alongside work. The work we do is to make money, investing is to use money to make money.
I compare it to 2 wheels of a car. Work is the front wheel, investing is the back wheel. You must put all your motivation into your work, develop it to the maximum, and then move on to investing when you reach the threshold. Investment creates large and fast profits. When people do not have the correct mindset, most people stop eating and working to invest.
Why do people abandon light for darkness?
An excellent investment success is when there is a profit of over 25% per year. But your business profits will often be higher than that. So when you haven't maximized your business, don't think about investing. But when people first invest, they use greed instead of risk management. It creates super profits, quickly. This profit (due to illusion but actually due to risk trade-off) is overwhelming compared to doing business, so people quit working and eating to invest. People think that those investment activities earn much better money. Once again affirming that profit comes from risk, not ability.
This creates 2 disadvantages:
You decrease/lose when your old source of income, knowledge skills slow down. This is your forte, you give it up to pursue a completely new field.
You will use the money you earn from investing for expenses because you no longer have income from working. As a result, total assets have slowed down due to spending cuts.
Understand as follows: You have capital of 100k USD which is not small. You invest at a rate of 40% (a level above the genius Warren Buffet), specifically 140k USD. But because you quit your job to invest, now you only have one leg left to walk. This 40k USD profit you will have to use to cover expenses and living expenses. Next year, you still only have capital around 100k USD, so your personal development is insignificant.
Lesson: Never neglect work to invest. Never spend too much on investment returns
You have to let your investment be like another person working next to you so that you can go far in the future. Of course, you can take profits from investments for living purposes. But so that it does not hinder the growth rate of your assets, you should only use 2-5% of investment profits (ie < 1% of principal). Why is there this ratio: Because investing at 25% per year regularly is excellent. If you only take half of the profit from your investment to use, your accumulation rate is just over 10% per year.
Same rate of 35% per year
40k USD when letting the money grow independently => 16 million USD
40k USD when half of the profit is used => 1 million USD
Without accumulation, there is no meaning
This is a big mistake of over 90% of people. It makes many people earn a lot of money but the speed of wealth growth is not commensurate. This has 2 reasons:
Not seeing the power of compound interest
Not having a plan to use the money, meaning not researching and looking for money-making opportunities (section above)
Everyone knows compound interest, but what is the key to it:
That is the interest that must be generated on your entire capital.
That is the reason why in the above section I shared that capital is not allowed. It must be left independent and continuously increased to be truly effective.
You need to be clearly aware of the amount of capital you have, and the goals for that amount of money. Many people are judged by numbers, not percentages. For example, when they deposit 1 million USD, they use 100k USD to earn 25% to get 25k USD. Use another 100k USD to invest 10% to get 10k USD, save 5k USD tv.v. They have the feeling that the money is used effectively, because the amount is absolutely not small. But in fact its effectiveness is quite low.
Again: The key is that all capital must be put into the cash flow cycle. Now you see: Wow 30% is not simple. It is very difficult. Anyone who can make 30% a year with little risk will become super rich. If you dare to bet on the whole house to play the lottery, 1 house becomes 3.5 houses, it is very meaningful. Even if you win the lottery (more than 90 times), you only bet 200K and it doesn't mean anything.
Focus most on investment items that can use ALL of your capital. That's why real estate is the way many people build their greatest assets. Divided on average, each year's performance is very normal (when divided by 5 to 10 years). But in terms of total capital it uses, it is very good.
summary
- Requirements you need to achieve
- Determine your current capital
- Choose a target amount
- Try building a plan to reach that goal
- Understand the meaning of compound interest and independent interest
