Investments With Potential To Earn At Least 20% Per Year

By far the simplest and most reliable way of getting rich is saving and investing at least 15% of your income (the more the better) month in and month out in a diversified, balanced portfolio of stocks and bonds. Follow this simple advice and you’re almost certain to retire with a substantial nest egg over the course of a 40 year career. Even if you know nothing about investing, simply picking a low-cost target retirement fund and letting the pros do the hard work of determining your exact asset allocation over time will do the trick. Sounds good, right?

Well what if, like me, you just don’t want to wait that long? Of course, I’m not going to do anything foolish like invest all my savings in penny stocks or the lottery in some desperate effort to strike it rich overnight, but I don’t want to wait 40 years, either. Instead, say my desired time horizon to accumulate $1 million is 15 years (yes, I know $1 million won’t buy as much in 15 years) and I only have $10,000 to start. If I am able to invest an additional $1,000 every month, I would require a 20% annual compound return to reach my goal in 15 years. That’s ambitious, but not impossible. Now, where can I get that 20% per year?

Real Estate

Real estate is down and out right now, but that only serves to make it more attractive as an asset class. Direct ownership of residential and commercial real estate still holds outstanding long-term profit potential, even in this market if you buy correctly and take on a reasonable amount of leverage (70-80% LTV max). Not only do you get modest appreciation (don’t count on it), but you can also get cash-on-cash yields in the 12-14% range, not to mention loads of tax benefits. Nobody knows what the real estate market will do over the next few years, but 15 years from now a properly-bought and maintained piece of property should be worth quite a bit more than it is today. Put it all together and 20-25% annual returns are well within reach. Get lucky, and you could top 30%. All this in an investment you have partial control over.

Your Own Small Business

This is a topic I plan to write on in the near future: everybody ought to start their own home-based small business, if only for the tax benefits. But the benefits go well beyond taxes. Just where do you think you’re going to get that extra $1,000 per month to invest? You’re going to start your own business. It could be an internet business. It could be a homemade arts and crafts business. It could be a lawn-care business or anything else your heart desires. Now this doesn’t have to be something you do full-time, although you may want to eventually make that transition, but it is imperative that you save and reinvest all your earnings from your side business. You aren’t doing this to buy an HD TV, after all, you’re doing it to achieve financial security while you’re still young enough to enjoy it. If your business takes off, 20% per year is actually a very conservative estimate and you will have no trouble reaching $1 million on time. If not, you’ve still got a little extra cash to invest every month. Over time, that seed money will multiply many times over even if you earn much less than 20% on it. And guess what? Even after you reach that $1 million goal, you can continue doing your side business part-time as long as you want, so you won’t even have to rely on your nest egg to support yourself. In fact, hopefully you had so much fun achieving your goal you’ll decide to go for $2 million, $3 million, or more.

Be Warren Buffett

This is where evil scientists have a distinct advantage. If you were to invent some sort of personality-switching ray where you could put your mind in Warren Buffett’s body, that may be the path to go. Kinda like the 74 different versions of that Freaky Friday movie, except with rich people rather than little girls. On second thought, Warren Buffett is getting kinda old so scratch that. Maybe Justin Timberlake is a better bet. At least he can dance.