Author Topic: Compound Growth Success Stories  (Read 4168 times)

bob999

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Compound Growth Success Stories
« on: April 02, 2018, 04:08:27 AM »
Hi guys,

I know we have all heard about the 8th Wonder of the world (namely Compound Interest). We have seen multiple financial blogs where people give examples of how to turn $10000 to $1M by investing in the stock market over a long period of time. I was actually wondering if there are people out there who have actually done this or know of their friends/relatives who have done this?

I personally don't know anyone in real life who invested a small amount and then let it grow to some ridiculous amount. Except for an uncle in his 70s now, who bought some shares in a company for $200 many decades ago and they are now worth $50k (including inflation).

I am curious to know if this is a common occurrence.

sokoloff

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Re: Compound Growth Success Stories
« Reply #1 on: April 02, 2018, 04:20:44 AM »
Account by account, many people have done this. My current 401K is nearly $1MM just from regular contributions. The IRA I opened and funded for only 2 years when I first graduated is now worth 29 times what I contributed.

Our house has nearly doubled in value in the 11 years weíve lived here.

All you have to is put the money in, choose investments that will grow, and wait. Itís easier than growing grass and look how many people can do that.
« Last Edit: April 02, 2018, 04:23:19 AM by sokoloff »

alanB

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Re: Compound Growth Success Stories
« Reply #2 on: April 03, 2018, 10:56:57 AM »
Have you read this book?

bob999

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Re: Compound Growth Success Stories
« Reply #3 on: April 05, 2018, 02:56:45 AM »
Have you read this book?

No but I will try my local library. thx.

Imma

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Re: Compound Growth Success Stories
« Reply #4 on: April 05, 2018, 03:26:29 AM »
We bought our current home in summer 2015. Almost 3 years later, the value is up 16%, while the local index is up 10,5% over that same period. We didn't buy this house as an investment, but it has outperformed the market every year since we've bought it, and it's expected prices will continue to rise over the next couple of years.

My parents used to own a house that tripled in value over 20 years. I have a friend whose parents are property millionaires because they bought a run down old farmhouse with some land in the early 80s when people didn't like rural living and land was cheap. They renovated their house over the years but did all the work themselves, so they didn't spend $$$. The house is now easily worth over a million and it's not even a luxury home. Rich people buy these kind of properties and then spend half a million putting in pools and massive kitchens.

So it does happen, but you need to invest in the right things, patience, and a bit of luck.

Unique User

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Re: Compound Growth Success Stories
« Reply #5 on: July 22, 2018, 12:13:14 PM »
I bought $2,500 worth of company stock in a ESP in 1993 and left the job soon after.  Never touched it and it's worth $50k now. 

Spiffy

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Re: Compound Growth Success Stories
« Reply #6 on: July 22, 2018, 08:08:57 PM »
My parents bought their 3 bed 2 bath ranch house for $13,000 in 1968 and now it is worth $200,000.

TheWifeHalf

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Re: Compound Growth Success Stories
« Reply #7 on: July 23, 2018, 11:46:31 AM »
I don't know if its growth was good or not, but it's been fun watching it:
 27 years ago TheHusbandHalf stopped working for a railroad. He put in altogether maybe $500.
 We get statements 4 times a year and it's now $11,000.

They eliminated his job, gave him a severance pay, and he worked there long enough to get Railroad Retirement, which has better rules that Social Security. In fact, I think RR was the model used when they designed SS.

Dicey

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Re: Compound Growth Success Stories
« Reply #8 on: August 18, 2018, 11:30:36 PM »
Hmmm, paid $928K for our house in 2012. It's worth $1.35M now. Bonkers.

boarder42

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Re: Compound Growth Success Stories
« Reply #9 on: August 19, 2018, 03:39:46 AM »
I paid 440k for a house in 2016 that is worth 600-650k now.  Also you're not going to find many people in a fire forum who invested extremely little and just waited. Here we're looking to retire early so our main growth is by contribution not by compounding.

dude

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Re: Compound Growth Success Stories
« Reply #10 on: August 23, 2018, 07:08:26 AM »
Well, I don't have a story about some small investment held for 50 years, but my 401k statement tells me I've invested $276,706.12 over the past 20 years as of Dec. 31, 2017. My account was valued at $715,562.43 on that date. Today it's a tad over $768k.

Bought our condo in 2007 for $463k, it's now estimated to be worth $714k.

Both are pretty astounding to me, a formerly lower middle class kid who didn't have a pot to piss in for most of his life!

Dicey

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Re: Compound Growth Success Stories
« Reply #11 on: August 23, 2018, 08:00:44 AM »
I just realized I have a better success story than my current home, mentioned upthread, though the numbers are much smaller. I bought a condo on a short sale in December, 1996 for $120k. I sold it in August, 2001 for $260k. It only needed paint, carpet, a new bathroom faucet and medicine cabinet, all of which I did at the beginning so I could enjoy it. My cute little condo more than doubled in value in less than five years.

Recently, it sold again for $533k. Except the owner had completely gutted the place during the 17 years she'd owned it. High-end everything now, but no more square footage, lol. Even though the price had doubled again, her return on investment was significantly lower than mine.

Note to @boarder42: You guessed it. This is where I learned the power of leverage and the value of a good, long mortgage, even if it was at 7%, which was very competitive back then.

Quick note on percentages vs. dollars. Sure, a large percent of increase is great, but dollars are what buy groceries. My new house has had a much smaller percentage gain, but $400k in appreciation beats $140k, even adjusted for inflation.

clarkfan1979

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Re: Compound Growth Success Stories
« Reply #12 on: August 27, 2018, 02:06:16 PM »
Exponential growth can happen with any type of investment in 30 years. When you are talking 10 years or less it's mostly going to include loans and leverage (business or real estate).

I bought a 3 bed/2 bath/2 car garage in Florida in Jan 2012 for 95K as a primary home. I put 5% down on a 90K loan. My initial investment to get the property was 5K down and 4K of closing costs. Then I spent 16K fixing it up. I was all-in at 120K, but only 25K of my own money. Today it's worth about 250K and very cash flow positive. The loan is now at 74K.

If I sold this year I could have avoided capital gains because I owned it in 2 of the last 5. However, I just kept it. If I sold, my 25K would now be worth 195K about 6.5 years later. After 6% of transaction costs I would be left with 161K. Add in another 34K of rental income over the past 3 years and I'm at 195K.

It was my primary home until August 2015. The rents over the last 3 years have been 1600/month, 1725/month, 1700/month and now currently 1850/month.

Mortgage, taxes and insurance totals $615. I allocate about $150/month for basic repairs.


I think 25K to 195K is around a 780% total return. Not bad for 6.5 years. 










 

« Last Edit: August 27, 2018, 02:16:44 PM by clarkfan1979 »

Dicey

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Re: Compound Growth Success Stories
« Reply #13 on: August 27, 2018, 08:02:09 PM »
Totally agree with you, @clarkfan1979. I'm a huge proponent of the DONT Pay Off Your Mortgage Club, because: leverage. Cheap mortgages and compound interest are tsunami-like forces for good on the path to FI. Great example!

My experience on the condo mentioned above also utilized leverage, but my records and my brain are too scattered to track down the details. I wouldn't have reached FIRE with out the real estate component of my portfolio.

clarkfan1979

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Re: Compound Growth Success Stories
« Reply #14 on: September 04, 2018, 09:30:43 PM »
Totally agree with you, @clarkfan1979. I'm a huge proponent of the DONT Pay Off Your Mortgage Club, because: leverage. Cheap mortgages and compound interest are tsunami-like forces for good on the path to FI. Great example!

My experience on the condo mentioned above also utilized leverage, but my records and my brain are too scattered to track down the details. I wouldn't have reached FIRE with out the real estate component of my portfolio.

When I purchased the Florida home I had about $56,000 of student loan debt around 5%. Dave Ramsey would have preferred that I paid off the student loans. However, even if we downsized and rented it still would have cost us $1,000/month, so I would have had less cash to throw at the student loans.

Instead of getting a guaranteed rate of return of 5% by paying off the student loans, I took a little risk and got 780% return.

scantee

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Re: Compound Growth Success Stories
« Reply #15 on: September 04, 2018, 11:56:30 PM »
I know of a case of extreme home appreciation! An extended family member bought an apartment in Manhattan for around $100k in the late 70ís. You know, back when everyone was fleeing the city because most people thought they were hellholes that no one would ever want to live in the future.

Itís worth around $8-10MM today.

BrokenBiscuits

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Re: Compound Growth Success Stories
« Reply #16 on: September 05, 2018, 01:55:59 AM »
Compound interest is ruining my early retirement plans!

I worked out recently that if I contribute nothing more whatsoever to my current stash then, even with a fairly pessimistic compounding rate of return, I will likely be able to retire in my 50ís. A decade or so ahead of my peers.

Iím not as hardcore as some on this site but still have decent frugal values. Knowing that work I have put in during my 20ís and 30ís means some form of early retirement is on the cards, well, it makes me question whether some of the further sacrifices are worth it to just shave a few more years off.

nonsequitur

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Re: Compound Growth Success Stories
« Reply #17 on: September 06, 2018, 09:48:15 PM »
When I first began escaping from Edward Jones and moving to Vanguard, I created a separate "play" account at another brokerage.  This included an orphaned $1500 sitting in cash in a Roth account earning zero interest.  I used it to buy $1290 worth of AAPL in 2009.  The AAPL shares, with dividends reinvested, are now worth more than $18k.