Turning $10,000 into $10 million
Update ETF Portfolio
Hi Partner 👋
Welcome to this week’s 📈 paid edition 📈 of Compounding Quality. Each week we talk about the financial markets and give an update on our Portfolio.
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Great things happen to those who invest patiently.
But please don’t take my word for it.
In 1918, John William Sterling donated $15 million to the Yale Endowment Fund.
$15 million in 1918 is the equivalent of more than $300 million today.
John William was a Yale University alumnus and a successful lawyer.
As John was never married and didn’t have any children, he decided to give away most of his money to the university at his death.
But there was only one catch…
The university couldn’t use the money right away.
Instead, they should invest it for at least 40 years.
And guess what happened?
The endowment fund grew to one of the largest university endowments in the world!
When Yale University wouldn’t have touched the money until today, it would be worth approximately $168 billion.
That’s how the magic of compounding works.
To be honest, I have been thinking about doing something similar myself.
What if you invested $10,000 in the S&P 500 today for your descendants and the money couldn’t be touched for 200 years?
I know….
This money would probably be for my great-great-great-great-grandchildren.
At least if we make it that far.
They (probably) won’t even know who I am. And they probably won’t care.
However…. Maybe they would care if they received this investment in 200 years?
At a yearly return of 9% per year, this investment would be worth $513 million.
$513 million in 200 years from now is worth approximately $10 million in today’s dollars.
$10,000 turning into $10 million. That’s not bad at all.
ETF Portfolio
To achieve something like this, investing in an ETF would probably be the best way to go forward.
Even Warren Buffett said it:
"In my view, for most people, the best thing to do is own the S&P 500 index fund." - Warren Buffett
Our ETF Portfolio consists of 5 ETFs.
It uses small tweaks that should perform slightly better than the market as a whole.
Over the past 20 years, our ETF Portfolio performed 2.2% per year better than the S&P 500.
This means an investment of $10,000 turned into:
Our ETF Portfolio: $87,300
S&P 500: $59,000
Tomorrow at the opening, we will add to our Portfolio.