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R. Klein, EA
R. Klein, EA, Accountant
Category: Finance
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How do I turn my $250,000 investment into $3,000,000 in 15

Customer Question

How do I turn my $250,000 investment into $3,000,000 in 15 years?
Submitted: 2 years ago.
Category: Finance
Expert:  R. Klein, EA replied 2 years ago.
Thank you for your finance question today.

Turning 250K into 3MM in 15 years is difficult, but not impossible. It requires both discipline and an understanding of investments.

Simply putting 250K into the stock market or bonds will not likely yield the goal you seek. Assuming a historical 8 to 9% annual year-over-year return in the stock market with no downturns, you would expect less than $1MM after 15 years.

Therefore, in order to achieve this goal, you need a total average return of close to 17% Understanding the markets leads you to the concept that 17% is considered a risky level of return and one not normally found in the stock markets over the long-haul.

Therefore, you are going to need to make investment choices outside the range of typical investors and take risks that are greater as well. This also means that your chance of failure increases as well. These ideas go hand-in-hand.

AN old joke tells us that the easiest way to make your nest egg go to $3MM in 15 years is to start with $6MM.

The best chance you have for success is to invest in young businesses and hope one or more succeed wildly, to invest in real estate where you can leverage your money, or to find some other opportunity where risk is high.

Real estate, in my experience, is very powerful because not only do you leverage your returns, but you also can postpone much or all of the taxes. However, the downside is that you may have to take an active role in managing real estate--whether individual homes or commercial real estate, all of which require some tenacity and skill.