Investing Your Money Without Gambling: The Numbers

The core principle of a financially free person is “unearned income.” This means that you have money that makes more money without requiring you to put in any labor. Meanwhile, you can sit back with your hands behind your head and watch your wealth grow. Your goal should be to turn your earned or salaried income into investments that bring in more and more streams of unearned income. The key to this process is choosing smart, reliable investments with a decent rate of return.

The Numbers

In planning for your retirement, you decide that you would like $100,000 a year to live comfortably. How long will it take you to have enough investments or savings so that you live off of the “unearned income” that they produce each year?

If you save or invest $1000 every month, here are the rates you need to achieve your goal:

1) A 6.00% rate of return after 37.25 years will equal $1,666,660, which is the amount needed to provide you with $100,000 per year if you continue to earn 6.00% on it.

2) An 8.00% rate of return after 28 years will equal $1,250,000, which is the amount needed to provide you with $100,000 per year if you continue to earn 8.00% on it.

3) A 12.00% rate of return after 18.70 years will equal $835,00 which is the amount needed to provide you with $100,000 per year if you continue to earn 12.00% on it.

4) A 15.00% rate of return after 14.90 years will equal $666,667, which is the amount needed to provide you with $100,000 per year if you continue to earn 15.00% on it.

5) A 20.00% rate of return after 11.25 years will equal $500,000, which is the amount needed to provide you with $100,000 per year if you continue to earn 20.00% on it.