By Stephanie Spillmann Updated 1/14/18

Turn $1000 into $2.6 Million


​Generation Z and Young Millennials: Claim Your Free Millions


Am I kidding? Not at all. If you’re young and willing to hustle, you really can turn $1000 into $2.6 million. Generation Z is the age bracket to target for capitalizing on insane compound interest gains.


With decades stretching into their horizon, this youngest investment generation has upwards of 45 years before retirement. That’s enough to grow a fortune.



Who is Generation Z? Most agree they’re the generation born in the mid-’90s and later. They are “millennials on steroids” according to an article in the New York Times.

Our focus here is on Generation Z, but 20-something millennials can also reap huge rewards by starting a retirement account now. Without further ado, here’s the scoop on compound interest.


The Magic of Compound Interest in Your Early 20s


The claim at the beginning may seem like an incredibly propagandist statement. What am I trying to sell you? How on earth can a nineteen-year-old turn $1000 into $2.6 million?


There is a catch. For the $2 million-plus, you must start when you’re 19-22, with no delay. If you don’t read this until you’re in your later 20s or older, don’t stress. You can still grow your $1000 into a nice, sizable sum, and the money that accumulates is still free.


What is Compound Interest?



​This is where it gets exciting. According to Merriam-Webster, compound interest is “interest computed on the sum of an original principal and accrued interest.”


The money you initially put into a retirement account, for example, will earn interest, of course, but so will its interest. Interest that grows interest is pretty cool.


Take advantage of this while you’re young and have 40-plus years before retirement. The sooner interest kicks in on your initial investment, the sooner that interest begins earning money as well.


Tick tock — every day that you don’t have your $1000 in an account is money lost…seriously.


“The most powerful force in the universe is compound interest.” Albert Einstein



An Exciting Example of Compound Interest


Are you excited yet?


Here’s a hypothetical example. Feel free to imagine yourself in Susan’s glorious shoes.


19-year-old Susan opened an individual retirement account (IRA) very early. She had $1000 as an initial investment, thanks to some savings and graduation money, and committed to a $100-per-month investment thereafter.


Several decades later, Susan turns 65 and is ready to retire and begin taking withdrawals from her IRA. She’s had 46 years to grow interest on her initial $1000 plus her $100-per-month investment.


The initial investment, plus her monthly contributions, came to a grand total of $56,200 over the 46 years she has owned her IRA account.


Her retirement balance is–drum roll–$2,685,908.81. She has earned a total of $2,629,708.81 in free interest money.


Let that sink in. Susan invested only $100 per month after that first $1000 at age 19. She now has more than $2.6 million to play with.



What Happened With Bill?


Bill is Susan’s older brother. He’s studying finance as a graduate student and aspires to work on Wall Street. Unfortunately, Bill’s high school didn’t offer personal finance. He started an IRA account when he was 26.


With the same initial investment of $1000 and a monthly contribution of $100, after 39 years of growth, he still came out a millionaire. We can’t feel too sorry for him.


His total $47,800 investment, over the 39 years, grew to $1,158,661.53 by the time he reached 65. He earned $1,110,861.53 in free compounded interest. Not too shabby, Bill.


You can find several compound interest calculators online, including Suze Orman’s website, where you can play with the numbers. They’re great tools to estimate what you can earn at any starting age.


Experiment with varying amounts of initial investment, along with the monthly contribution you’re willing to make. Plug in your numbers and witness the magic of compound interest!


Stack of coins with pens and financial papers.

Let’s Talk Interest Rates


The calculated earnings from the hypothetical investment stories above are based on 12% average yearly interest. When you open an IRA account, the interest earned, and the number of years your money grows, will determine your end result.


Obviously, the more years you can grow your money, combined with a decent amount of interest that compounds, equals a great recipe for growing wealth. But is 12% interest realistic?


I think so. Based on three of my own mutual funds with Vanguard, the growth rates over a five-year period right now are 12.9%, 13.2%, and 17.3%. Money guru Dave Ramsey has a great article about the reality of a 12% interest growth rate. ​



Mutual Fund Investments


There are dozens of investment types, but the mutual fund is a strong choice when you start an individual retirement account. You’ve most likely heard the term “portfolio.”


Imagine a portfolio of your finest work samples. These are what you want a future employer to “invest in” or take notice of. They have value, and most likely include a diverse array of your best skills.


An investor’s mutual fund is a collection of diverse investment samples that are chosen to bring you value. An easy way to imagine a portfolio is like a pie diagram with various pieces.


A mutual fund may have a variety of small and large company holdings along with a nice mix of U.S. and international businesses.


With a mutual fund, an investor has no ownership of the companies listed in a portfolio. However, they do own shares of the fund invested in them.


Buying mutual funds is a way for many investors to put their money together to take advantage of the earnings of well-performing companies.


Mutual fund IRAs come with some great benefits:

  • You can get started with only $100
  • You don’t need to know anything about the stock market
  • Investment companies specialize in these funds so you don’t have to


Skyscraper buildings looking up with clouds.


Choosing a Good Investment Firm


There are dozens of reputable investment firms to choose from. Here are my top picks, but I encourage you to do some research and find what best fits your needs.


Vanguard’s reputation for dependability, low-cost management fees, and performance is legendary. “94% of Vanguard no-load mutual funds performed better than their peer group averages over the past 10 years.” 


No-load funds are mutual funds with no commission or sales fees when you choose to buy and sell. Vanguard’s extremely low management fees and very helpful investment counselors make them an excellent choice for new investors.


While many of their funds require an initial investment of $3000 and up, they have a Target Retirement Fund you can start with $1000. Over time, you can choose other well-performing funds once your investment has grown. Vanguard makes it easy to buy or exchange up when you’re ready.


Wealthfront is a beginner’s dream. There are no management fees for investments under $10,000, and they will keep your funds well diversified for you. Wealthfront is great for investors who are new to the game and want a hands-off approach.


The starting investment with Wealthfront is $500, “which entitles you to a periodically rebalanced, diversified portfolio of low cost index funds,” per its website.


Charles Schwab is also a great choice for beginners. With 24-hour telephone support and over 3,000 funds with no transaction fees, Schwab is a great contender in the amateur investment scene.


If you don’t have the $1000 to open an IRA at the moment, they will waive that minimum as long as you commit to investing $100 per month.


Automatic bank transfers make this an easy process. And if you leave it in place after reaching that $1000 goal, you’ll knock it out of the ballpark with interest growth.


 Earning More Money and Better Budgeting


The best intentions don’t get us very far, even when we know there are things we should do for our own good. That’s what strategies and plans are for–putting intention into action.


You’ll be challenged with a million reasons why you can’t come up with $1000 for an initial IRA investment, or the $100-per-month payment to your future self.


However, I can promise you they’re only excuses, and with some prioritizing you can make this happen. It takes hard work and a commitment not to coddle yourself.


Here are some practical ways to cut back on spending, bring in extra cash, and simplify the process so you can build your IRA now, for that multimillion-dollar payoff later.


  • Set your bank account to monthly auto-deposit and you won’t miss that $100


  • Put your tax refund (or a chunk of it) into your IRA or use it for that initial investment


  • Cut the eating out/bar spending until you’ve opened an IRA and are consistent with the monthly deposit


  • Find a side hustle — online options abound for computer, marketing, bookkeeping, web design, writing etc.



  • Forget phone upgrades or new technology until after you’ve invested in yourself — if you must replace a laptop or computer, shop Amazon’s deeply discounted open-box products!

Shop Amazon Warehouse Deals – Deep Discounts on Open-box and Used PCs


  • Sell old/unused gaming consoles, games, technology or textbooks on Amazon — click the link below to list or buy your textbooks for stellar deals!

Shop Amazon – Used Textbooks – Save up to 90%


  • Slash your cell phone bill — check out rock-bottom pricing from Ting. One line starts at just $6 and you only pay for what you’ve used each month for talk/text/data.

I’ve saved $75 a month switching to Ting from Verizon!

** Right now, Ting is giving everyone a $25 credit for signing up.


  • Check into cheaper car insurance — GEICO really did save me a bundle


  • Put off concerts and high-end entertainment until you’ve put your first $1000 into action


  • Call your internet and cell phone providers and ask to receive current promotional pricing


  •  Drive a used car — saves on insurance costs and big car payments so you can invest instead




Albert Einstein face and quote about compound interest


Generation Z and young millennials, do everything in your power to fund that initial $1000 (or start with a no-minimum IRA).


If you can only put in $50 per month for a while, that’s better than not starting at all.


When Albert Einstein discovered the formula for compound interest, it was truly one of the greatest mathematical discoveries. With a 10% interest rate, money doubles every 7.2 years.

That, my friend, is impressive!


Let us know what you think in the comments. Have you started investing in yourself yet?


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If you're a young Millennial or Generation Z, witness the magic of compound interest. You really can turn a $1000 investment into $2.6 million! We'll show you how to earn, save, and budget your way to a multi-million dollar retirement. 
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