Turn $100 into $1 Million
The other day, one of my crypto gurus was giving my class a little lesson in compounding interest, aka the 8th Wonder of the World.
Sometimes you'll see people that push retirement accounts (especially those invested in the traditional 60/40 of stocks and bonds) mentioning how money can compound if you invest it well. I've even seen charts comparing how your money can grow if you are earning 8% a year, especially compared to the poor people who get a late start on investing and don't benefit as much from the compound interest effect.
My teacher was ranting just a bit that, if they had explained compound interest properly to him when he was in school, he would have become interested in investing a lot sooner and progressed a lot farther.
Then he shared a spreadsheet with us which rocked my world!
Take a look at this:
As you can see, if you are earning 10% per month and you start with $100 (that is NOT a typo) AND NEVER ADD MORE MONEY TO YOUR ACCOUNT, you can be a millionaire in month 2 of your ninth year of investing.
First of all, you may be wondering how in the heck you can earn 10% a month, since most banks earn .05% or less per YEAR, but let's hold off on that idea for a moment and take a look at the second spreadsheet:
This is a much larger spreadsheet, but you can get the idea from just a portion of it.
It shows what happens if you add $100 per month to your trading capital and earn 10% on it (the second column of numbers).
Do you see how much your overall balance increases? (My guru called it "10x" investing because your account is about 10 times bigger at the end of each month!)
I take away two lessons from this:
- If $100 extra investment capital per month can help you grow that much faster, what can $500 or $1000 per month do? (or even the occasional booster of a $1000 annual bonus or something....)
- How in the heck do you earn 10% per month?
To answer that second question, let's start by reviewing some of your investment options.
The typical Investment Options, in no particular order
1. Real Estate -
I know nothing about Real Estate so you'll have to educate yourself elsewhere if you want to learn about that. I can imagine that the right property rented out could bring you 10% monthly income (and hopefully increase in value over time!)
2. Collectibles, Precious Metals, etc. -
I also know nothing about these except that their value can be quite unpredictable and I'm not sure there's any way for them to produce income.
3. Savings Accounts -
Some people think that their savings account is an investment. I guess it's a great investment if you're happy with 0.5% or less interest per year. (And don't get me started on the countries that actually CHARGE you interest....or the way that inflation is making your money in the bank lose its value!)
4. Bonds -
Everyone always claims that these are a good balancing force in your investment portfolio, but I've never been that impressed and haven't learned enough about them to advise you. Google says that rates for US Treasuries are approximately 2.5% per year, although junk bonds may earn you higher rates (with more risk).
5. Dividend Stocks -
Every stock is different, but many dividend stocks currently pay between 2 and 5% annually of your original investment. If you choose well, your investment value can increase at the same time that your dividend increases over time. (I currently have one stock paying me 17.45% annually of my original investment!)
6. Other Stocks and Crypto investments -
If you can learn how to trade or pick winners, you can do quite well. With the right trading strategies, it is very possible to earn 10% or more per month. However, the risk and the stress involved with successful strategies is also much higher. Do you have the time and the stomach for it?
7. Options on stocks -
If you like trading stocks but wish to leverage your success, you can learn how to trade options (calls and puts) on various stocks. Risk and stress for options is even higher than for regular stock and crypto trading, but can be quite lucrative if you have a good strategy. Options can also be useful in an environment where stocks are going down in value, depending on your trading strategy.
8. Crypto yield farming or other interest protocols -
there are various places to park your cryptocurrency and get paid interest or staking fees. Payments can be earned on stablecoins (coins that maintain their value, usually equivalent to the U.S. Dollar) or on other coins like Bitcoin or Ethereum (which adds risk since the value of the coins can fluctuate wildly). Rates on stablecoins average between 8 and 20% annually, although I hear rumors about "yield farming protocols" that could be much more lucrative. (Do your own research!)
9. Crypto bot automations -
When you set up a grid bot automation, you can collect payouts minute-by-minute as the coins involved fluctuate in value. With some luck and time, the value of the coins involved should increase in addition to the amount you are paid by the bot trading. A little less risky than just straight crypto/stock trading because the payouts offset some of the potential losses. Also more of a "set-and-forget" strategy, although I've learned that some babysitting during down markets can increase your successes.
It all boils down to: how comfortable are you with risk? Do you like to be active in your investments or let time do the work for you? And how much do you want to earn from your investments?
Lessons Learned From My Portfolio
Since my crypto trading guru shared his spreadsheet with my class, I've been trying to rethink my portfolio strategy to see how close I can get to earning 10% per month.
Now, what he teaches is trend trading. As I've mentioned elsewhere, trend trading can be tricky and stressful, especially when the market is in a downtrend (which it most definitely is at the time of this article!)
In fact, I got really frustrated in November because it was just about the time I was ready to go "all in" on trend-trading crypto and I was sure I would make a good chunk of money.
Except then the market fell....and fell some more....and then, oh yeah, fell some more.
I found it impossible to trade, not only because I was worried it wouldn't work out (mindset is more than half the battle), but also because it's just a lot harder to make money when everything is going down.
And in the meantime, the bot automations that I set up in June kept on going.
Except they didn't.
Well, they were set up and all, but I had the brilliant idea to trade a leveraged bot (TWICE! because I didn't learn the first time!) and lost money on both of those very quickly as the market crashed. (Leveraged bots trade three times as much as regular bots and are NOT recommended by the guru who taught me how to set up bot trades because of their risks!)
Another of my bots was earning me lots of money ($955 in 2 months and 6 days), but then it fell out of range for a while. I managed to regrid it and it earned $195 in 19 days before falling out of range again. (When the prices of the coins involved go down, the coin starts wiggling below your grid and you stop earning payouts until the coin values return.)
(The dots earn me money. No money is earned when the grid is above the current coin trades.)
A third bot is more of a slow and steady bot involving Ethereum and Bitcoin. Unfortunately, it's also been out of range for well over 2 months and the value of Bitcoin and Ethereum have dropped by almost half of their peak value.
When the fourth bot started dropping out of range, I figured out how to reactivate it by regridding (moving the bot automation back in range). But then my fifth bot has been wiggling in and out of range.
Sigh.
All of this added up to me being frustrated and thinking annoyed thoughts like why did I pay so much for a class to teach me how to do this and it's NOT WORKING!!!!! (or not working as well as I hoped....)
And yet.
In the seven and a half months that I have been running my bots, I have earned $6210 in payouts. (That includes $620 of Bitcoin, which continues to fluctuate in value each day. That ALSO includes all the days my bots weren't earning payouts, which has been a solid three months for some of them.)
Guess what?
If you divide my $6210 of payouts by the amount I've invested (approximately $14,000), you get a percentage earned of 44%. If we divide that by 7.5 months, that works out to 6% earned in payouts per month during a time that included 3 months of TERRIBLE returns!!!!!
(In fact, the % earned might be even higher if you include the facts that I added $7,000 of the $14,000 in late December or that I lost $3500 to leveraged bots that my mentor NEVER recommends....so you can skip that strategy! I've tested it for you.....no reason to repeat my mistakes....
Oh wow: this made me curious so I just checked: I earned $4750 before I made that additional deposit of $7000 in December. That means I was earning a return of over 12% per month before the market crash!)
Six to twelve percent returns from a set-and-forget strategy (most of the time, although I check on it daily because I'm obsessed 😉). And the stress is equivalent, or a little less, than the stress from owning stocks or crypto outright (because markets fluctuate in value).
Yep.
Think I'll take it.
There are signs the market might be turning around soon, but even if it doesn't just yet, any bots that are started right now will probably stay profitable through the rest of this downturn (unless Bitcoin drops to $20,000....which I suppose is technically possible, but I'm pretty sure it won't.)
And then, when the market takes off again? Oh boy! I can't wait!
In fact, in researching this little report to you, I've convinced myself yet again that it's time to scrounge up some more funds from my stock trading account and put them to work in my bots.
Because, I don't know about you, but if you can turn into a millionaire with $100 and 9 years and 10% monthly returns....
Just imagine what you could do with $3000 and 10% monthly returns....
Who's with me?
If you'd like to learn more about the class that taught me to set up bot automations that could easily earn you 10% monthly returns on your investment (or more!), check out our review of The Plan.