How to Turn $10,000 into $1,000,000…

The following chart, Growth of $10,000, shows you how much your money will grow at a 10% annual growth rate.  Why assume 10% growth?  The stock market has historically averaged an annual growth of 10% over the long-term (20, 50, or 100 years).  We’ll err on the conservative side to prove our point.

The growth of $10,000, of course, assumes that all of your money is invested in tax-deferred growth vehicles (such as IRA’s and/or Retirement Plans).  If your money is invested in a taxable portfolio you will be taxed on the earnings (dividends and capital gains).  Assuming an average 20% earnings reduction each year due to taxes, your 10% annual growth rate is reduced to roughly 8% per year.

It is extremely important to understand and realize that if you are able – during the course of your lifetime – to increase your average annual rate of return by just 1% per year, it will make a significant difference in your standard of living at retirement!

Continue to: The Cheapest Way to Make Your First Million

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