If the market actually delivers 8% annual return over time in the future, it would be actually incredibly easy to build generational wealth.
A family can just set up a trust fund with $100,000 and invest it into SPY. Let's say 2% inflation. So the real annual growth is 6%.
In 100 years, the fund would now be worth 33 million dollars.
In 150 years, it would be 625 million dollars.
In 200 years, it would be 11 billion dollars.
As you can see, it would be incredibly easy to build generational wealth if SPY did really return 8% for the next 200 years.
But it seems like it's too good to be true.
I mean, I realize I'll be long dead before 200 years and most people won't care about what happens after they die, so setting up this fund sounds ridiculous. But plenty of rich people with net worth of 10m+ continue to earn money because they want to build generational wealth. The question I'm trying to bring up is... why do they bother doing that when you can just invest 100k into SPY?
I doubt we'll see the average middle class family have 11 billion dollars of net worth 200 years from now. So doesn't a 8% average return sound too good to be true?
Maybe the 8% average return was possible over the last 100 years because investing wasn't as accessible and easy as it was today. And the benefit of compound interest wasn't a common knowledge among the regular middle class folks. But now since everyone seems to be an investor, will the market continue to deliver 8% returns over time? Can the masses really generate wealth this easily?
Submitted November 15, 2020 at 08:21PM by YugeCPA https://ift.tt/32Pshkd
