Many might not realize what a dollar a day can really mean. Just by itself it is 7 dollars a week, about 30 dollars a month, and 365 dollars a year. But what can that add up to over a long period of time while accruing compounded interest? By taking that 30 dollars a month and investing it at 10% interest that compounds monthly while reinvesting the profits you can end up with $67,815 after 30 years.
So is it really that easy? What’s the catch? First off you have to start. Many of you reading this are probably thinking “I don’t have any extra cash each month that I can invest”. But is $30 really that much. What can you do to free up $30 a month from your budget? You can eat out one or two times less a month, manually wash your own car, skip the morning coffee, or cut back that premium cable service to just basic service. Each of these items will accomplish what you need here.
Second, you have to find a safe investment that can make you 10% interest. There are a lot of options for this, but the one that I am going to recommend is a mutual fund. Mutual Funds come in all shapes and sizes. There are many options to choose from with the potential of making up to 20% interest or more. Consult your financial adviser for the best option for you as I am not going to open that can of information in this article. Needless to say, there are options out there.
We showed you what can happen if you invest a dollar a day, but what if you up that to three dollars day, or $100 a month? Using the same 10% for 30 years you will end up with $226,049. Now take that $100 a month and find an investment that pays out 15% interest and you end up with $692,328 after 30 years. As you can see, you want to not only contribute as much as you can to this fund, but want to do enough research to find the highest rate of return while staying safe.
So what can you do to prevent the government from taking 35% of your earnings after the 30 years? There are a couple of options here. One is to wrap this investment in a Roth IRA. To contribute to a Roth IRA you use after-tax dollars, but all capital gains are tax free. For this particular investment a Roth IRA is ideal, as the money you make in the end is far greater than what you put in.
You can read about other options in the “Winning the 2 Financial Battles” post. One of which is using an overfunded Indexed Universal Life policy as a retirement vehicle that I am becoming more and more fond of, despite paying a fair amount upfront for the policy premium.
Another great way that can be phenomenal is found in this resource, Creating Wealth Without Risk. It teaches you how to capitalize on tax lean certificates, a system that can effectively produce an 18% return in six months or less.
To conclude, you need to be sure to be consistent in your investments. Do diligent research to find the perfect investment for you, and most importantly, get started today. After all, what is the point of saving money monthly if we don’t use the money saved wisely.