If one gains 20% per year on an investment of $10,000, in year 2 that investment will be $12,000. The gain might not sound that much however if one is to gain 20% on $10,000 over 25 years it would be a little more than $953,000. That is the magic of compounded return. With this article hopefully it will be clarified that very high returns are not needed every year to get high returns over time.

Different investment strategies will obviously give different returns. It is meanwhile possible to make lots of money if an average growth rate of 15% and above is reached per year, compounded over time. With this said, the get rich quick method might work, but it might also not. A safer method would be to set a goal of a yearly return on investments in percent and try to aim to get around that percentage. That would both potentially be realistic, and would also ensure that a practical goal is being worked towards. Below is the formula that can be used to calculate how much a certain return over time would affect the initial investment:

If the yearly return is 15% for 25 years one would square 1.15 with 25 which would result in 32.91 times the money.

What is needed know is that sustained growth of 15% over time is harder than it sounds, very few people can reach that passively. However, with little bit of active choices 15% and above can be reached. As an example, a passive choice such as investing in indies would generally give a return of slightly under 15%. In that sense, reaching above 15% should not be impossible.