In the previous article, the importance of disciplined investing and patient wealth accumulation was discussed. This article takes it a step further by illustrating, with concrete examples, how investing in solid companies with proven track records can contribute to substantial wealth growth over the long term.
A renowned company in our portfolio, active in sectors like infrastructure and real estate management, has delivered impressive returns over the past decades. The company focuses on value creation through investments in essential assets that generate stable and sustainable returns. Thanks to an average annual compound growth rate of 18%, this company has provided significant returns to its investors.
This case highlights how long-term investing, whether through a one-time investment or regular contributions, can yield remarkable results. Here are two scenarios that show what was possible and what can still be achieved under similar circumstances.
Scenario 1: One-Time Investment of $100,000 (ANG 180,000)
Imagine making a one-time investment of $100,000 (ANG 180,000) in this company in 1993. With a compounded annual return of 18%, this investment would have grown to a staggering $14,260,000 (ANG 25,668,000) over 30 years.
This example underscores the power of compound growth: reinvesting returns leads to exponential value growth as time progresses. For investors with a long-term vision, this is a crucial principle. While it requires patience and dedication, the results can be extraordinarily impressive.
Scenario 2: Start with $25,000 (ANG 45,000) and Annual Contributions of $6,000 (ANG 10,800)
Consider another scenario where you start in 1993 with an initial investment of $25,000 (ANG 45,000), supplemented by annual contributions of $6,000 (ANG 10,800). This equates to a monthly contribution of $500 (ANG 900).
After 30 years, with an annual return of 18%, this strategy would result in a final amount of $10,590,000 (ANG 19,062,000). This example demonstrates how regular investments, even relatively modest amounts, can lead to substantial wealth accumulation over time. Consistently investing, regardless of economic fluctuations, is a proven method for achieving long-term success.
Investments as Ideal Assets for Wealth Transfer
When the time comes to transfer wealth to the next generation, solid investments often offer a more attractive alternative to cash. Financial assets, such as shares in well-managed companies, are liquid and can be easily (partially) sold if necessary to meet needs. At the same time, the remaining portion of the portfolio continues to work for the beneficiary, enabling further growth.
Unlike cash, which is subject to inflation and devaluation, these assets not only provide stability but also offer potential for long-term value creation. This makes them particularly suitable for wealth transfer. As discussed in the previous article, investments are not only a financial tool but also an opportunity to create a legacy.
Conclusion
The power of long-term investing lies in the combination of patience, discipline, and the right choices. Whether through a one-time investment or regular contributions, investing in quality companies with proven returns offers one of the most effective ways to build and grow wealth.
Moreover, these investments offer unique advantages for wealth transfer. Their liquidity, stability, and growth potential make them an ideal choice for passing on wealth to the next generation. By choosing solid and sustainable investments, investors can not only provide financial security but also contribute to lasting value creation.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. For specific inquiries or personal recommendations, please consult a financial expert.
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