I'm on a quest to raise an additional $10k this year in income -- extra income outside my regular job. The numbers I ran show that making this amount and socking it away year after year can yield quite a sizeable next egg.
I've already suggested ways I'm working on this $10k including turning a hobby into an income, making money with credit cards and selling stuff you own. Today's suggested idea for those of you playing along: maximize your investments.
It's shocking how much a simple 1% more can return you over the life of an investment portfolio. Consider these results for the same $10,000 investment over 40 years -- the only difference is the rate of return:
- At 7% annual return, you'll have $139,948 in 40 years.
- At 8% annual return, you'll have $201,153 in 40 years.
- At 9% annual return, you'll have $288,160 in 40 years.
- At 10% annual return, you'll have $411,448 in 40 years.
- At 11% annual return, you'll have $585,593 in 40 years.
See how just 1% can make a world of difference over time? If you improve the results of a single $10,000 investment by and earn an extra $150,000 over 40 years (that's $3,750 a year), just think what will happen if you earn an extra 1% on a much higher level of investment for 40 years. You'll easily have your $10k per year made in this one area alone.
So, that begs the question, what can you do to maximize your investment returns? Here are some suggestions:
For me, all this adds up to investing in index funds.