Approximately how much would you need to invest at your child’s birth to make them a millionaire by retirement?
Approximately how much would you need to invest at your child’s birth to make them a millionaire by retirement?
A) $1,500
B) $5,000
C) $15,000
D) $25,000
The answer: A) $1500
If you invest just $1,500 at a child’s birth and leave it alone, it could grow to approximately $1 million by age 65—without adding another penny—assuming a 10% average annual return, compounded monthly.
That’s the power of time and compound interest.
Is 10% a Realistic Return?
Historically, the S&P 500 has averaged around 10% annually before inflation for nearly 100 years. That doesn’t mean it earns 10% every year—some years it drops, others it soars—but over the long haul, it’s been consistent.
With a low-cost index fund and a long-term mindset, 10% is a reasonable benchmark to illustrate how investing early can radically change someone’s financial future.