How much money will he or she have at retirement, say, at age 65?
After 30 years, when your child is 45 years old, that initial $50,000 investment will have grown to $748,665.
After 20 more years, when the child reaches retirement age, the initial $5,000 outlay over the ten-year period will have grown to $2,707,568.
After 10 more years, when the child reaches age 75, that initial $5,000 outlay over the ten-year period will have grown to $5,326,197.
As you can see, it took 30 years for the money to grow by about $650,000, but 20 years to grow $2 million more and only 10 years to grow even more than $2 million more.
In What Sort of Investment Might You Anticipate an Average Annual Return of 7%?
Ibbotson Associates, a well-respected Chicago-based research firm has calculated the long-term return of stock market investments since 1926 to be about 10%, with dividend income included. And our own experience since 1984 bears out those findings.
Of course, you cannot expect one company to necessarily perform as the market has a whole. And, You may think that the companies you pick or the market in general will produce higher or lower results going forward.