For your child: Turn $3,000 ROTH into $50 million

[JEDI]

http://www.marketwatch.com/story/how-time-can-turn-3000-into-50-million-2015-12-02

1) invest $3k in a small cap fund when s/he is born
2) when s/he has taxable income, move that $ into a ROTH in his/her name
3) avg 12% return from birth till s/he is 65 where the acct will be $4.75M

easy peasy way for your child to retire.

Now when s/he dies at 95, s/he would have withdrawn $20M and still have $30M in the acct.
thus $50M


omg this article is confusing in what it's trying to teach us!
I thought Marketwatch was better than that

 

[Rakehellion]

I stopped reading at "12% return."

 

[Rakehellion]

Also, basing your entire future on a plan that takes 65 years to accomplish: LOL

 

[TwiceOver]

While I don't expect 12% return, we plan to do this with some stocks his grandma gave him as soon as he has taxable income. Hoping at 14.

 

[TheGardener]

Lesson? There is a sucker born every minute. Bernie Madoff delivered 20% a year, year in year out, until....

 

[zinfamous]

50 million, huh?

 

[Zstream]

I stopped reading at "12% return."

Bahahha! Who gets 12% in return? I never achieved that.

 

[iamwiz82]

Bahahha! Who gets 12% in return? I never achieved that.

You opened a hornets nest of ATOT investing geniuses. You are going to have a few dozen people tell you that they have managed to do so while saving 50% of their income and bedding multitudes of models.

 

[Ken g6]

You opened a hornets nest of ATOT investing geniuses. You are going to have a few dozen people tell you that they have managed to do so while saving 50% of their income and bedding multitudes of models.

I've achieved 1 out of those 3. Not telling you which, though. ()🙂

 

[Jimzz]

Bahahha! Who gets 12% in return? I never achieved that.

I have got 12% or more, but not EVERY year; year after year after year...

The problem is anecdotes like this always say "Well fund X did 10%+ that year, and fund Y did 10%+ the year after, etc...". So in other words if you have a time machine you can do it. If not you are like most where there will be ups and downs.

 

[IronWing]

I've achieved 1 out of those 3. Not telling you which, though. ()🙂

Logic dictates that you must have scored 12% returns. If you had bedded multiple models, you would also have been able to save 50% of you income as models are cheap dates since they don't eat much. Since you only achieved one of the listed accomplishments, no models for you.

 

[JDawg1536]

You opened a hornets nest of ATOT investing geniuses. You are going to have a few dozen people tell you that they have managed to do so while saving 50% of their income and bedding multitudes of models.

If you use a 65-year period like the article does, the S&P 500 has averaged 11% since 1950.

 

[Slew Foot]

I've achieved 1 out of those 3. Not telling you which, though. ()🙂

Plus size male lingerie models

If you use a 65-year period like the article does, the S&P 500 has averaged 11% since 1950.

What that saying about past performance and future returns? Unless we kick inflation into gear, but then youre money wont buy crap.

 

[Imp]

Also, basing your entire future on a plan that takes 65 years to accomplish: LOL

The small cap part worries me more...

If you use a 65-year period like the article does, the S&P 500 has averaged 11% since 1950.

Think the geometric average since 1928 is about 9.5% pre-inflation. Bla bla bla, past don't guarantee future returns.

Plan B retirement plan for all: move to Thailand or another low cost of living country. English teacher by day, ladyboy by night, social security collector by whatever the hell time you get a check.

 

[PowerEngineer]

Well, this article is one of many aimed at well-off parents and grandparents looking for ways to help their next generations. Rather than giving the kids cash and then seeing them spend it unwisely, make them save it by putting it in an IRA account for them.

They'll thank you much later with much nicer flowers on your headstone. ()🙂

 

[DigDog]

with inflation, $50 mil = 30k today.

 

[JEDI]

You opened a hornets nest of ATOT investing geniuses. You are going to have a few dozen people tell you that they have managed to do so while saving 50% of their income and bedding multitudes of models.

does Lola count?

 

[Lonyo]

If you use a 65-year period like the article does, the S&P 500 has averaged 11% since 1950.

And kicking it down from 12% to 11% means you go from $4.75m to $2.6m.

The incorporate inflation at something like 3.5% p.a. on average (1950-2015) and your $2.6m becomes $350k effective.

Isn't finance amazing? Sure, it's still a lot more than $3k, but it also requires the future performance to be consistent with historic trends.

 

[JEDI]

And kicking it down from 12% to 11% means you go from $4.75m to $2.6m.

The incorporate inflation at something like 3.5% p.a. on average (1950-2015) and your $2.6m becomes $350k effective.

Isn't finance amazing? Sure, it's still a lot more than $3k, but it also requires the future performance to be consistent with historic trends.

$3k is a lot of $ back in 1950.

what do you mean $350k effective?

if he's 65 in 2015, $2.6M is still ALOT of $$$!
he can retire comfortably. and all on that SINGLE $3k investment made by his parents when he was born in 1950.

 

[JM Aggie08]

Not to stear the discussion off course, but would anyone be willing to provide any resources for educating myself on this kind of thing? The wife and I are wanting to begin investing on a small scale.

 

[Imp]

Not to stear the discussion off course, but would anyone be willing to provide any resources for educating myself on this kind of thing? The wife and I are wanting to begin investing on a small scale.

Not a major resource, but starting point could be to look up U.S. Treasury Notes and Treasury Bond yields over the past century.

Look up historic geometric average returns of the S&P500 over past century -- something about arithmetic averages not accounting for things like going up 100% one year, going down 50% the next.

Review short-term and long-term capital gains, tax treatment of qualified/non-qualified dividends, and tax shelters.

Review ETFs offered by big companies like SPDR and iShares.

Also review inflation rates over the past century.

Edit: Forgot a big one: look up wash trades or wash sales.

 

[brianmanahan]

Not to stear the discussion off course, but would anyone be willing to provide any resources for educating myself on this kind of thing? The wife and I are wanting to begin investing on a small scale.

http://bogleheads.org

http://reddit.com/r/personalfinance

 

[TheGardener]

does Lola count?

Jared Fogle and the US Attorney would both answer yes.

 

[edro]

Jared Fogle and the US Attorney would both answer yes.

You don't know lola...

 

[WackyDan]

Bahahha! Who gets 12% in return? I never achieved that.

Not for that many years in a row. My daughter's 529 has been delivering a good 10% to 12% per year for four years though...

I almost always base my investment decisions on a 5%-6% overall growth per year. Seems to be working and I tend to beat that occasionally.