Create a Money Machine
The Kaderlis have taken advantage of the power of compound interest to grow their retirement nest egg. While building their savings, they invested their money into index funds that tracked the performance of the S&P 500. “Since we retired in January 1991, the S&P 500 has averaged a 10 percent [return] per year,” Billy said.
So their initial $500,000 investment earned interest, and interest has continued to accrue at about a 10 percent annual rate on both the principal and the interest that has accumulated. “When you’re spending 2 or 3 percent, that leaves 7 or 8 percent that continues to grow,” Billy said. As a result, their net worth is actually higher now than when they retired.
“We created a money machine,” Billy said. “That’s why I was confident this was going to work out.”
Create a Money Machine The Kaderlis have taken advantage of the power of compound interest to grow their retirement nest egg. While building their savings, they invested their money into index funds that tracked the performance of the S&P 500. “Since we retired in January 1991, the S&P 500 has averaged a 10 percent [return] per year,” Billy said.