Hey guys, it's sasha, i don't know about you, but when i think of a billionaire, i think, of a russian oligarch who was in the right place at the right time to appropriate a steel or an oil company. When the soviet union broke up - or i think of a silicon valley, tech entrepreneur who beat the odds and became extremely rich when thousands of others exactly like him did not make it, we don't think of millionaires when we think of people who are obscenely rich. It sounds odd, but you will probably be a millionaire at some point in your life. It is very likely the average house sold in the us today is sitting at 408 100 according to the saint louis fed, and that is more than double what it was just 20 years ago.

So give it another 20 years and being a millionaire will just mean owning an average house, and a couple of average cars, but becoming a billionaire is something we generally think is completely out of reach. It is a ridiculously huge amount of money and it is absolutely impossible to become a billionaire unless you are either born rich or you strike luck somewhere along the way right. Well in this video, i will show you something that might just blow your mind, because it is absolutely possible to become a billionaire by just investing a hundred dollars a week, and i will show you exactly how and talk you through. Some of the caveats i mean duh, there are caveats to becoming a billionaire if you do want to start investing to become a billionaire.

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I guess, being the only completely free app for investing in u.s stocks is kind of hard to beat. Now, if you do want to try light year out, you will get a free 10 bonus when you sign up and make a deposit. All you have to do is use my link in the description to get the app or in the pinned comment and try it out and enjoy being paid ten dollars for the privilege. So how exactly do you become a billionaire by investing a hundred dollars a week? It sounds absurd right.

Surely it is not possible. I mean a hundred dollars a week is something pretty much anyone could afford to do, even if you're in a relatively low wage. If you really plan your finances well and manage your spending, you can probably manage to squeeze a hundred dollars a week into investing. So let me start by showing you the basic numbers and then i'll talk about those caveats.

The caveats are pretty important, so make sure you listen up. Okay, here is a little spreadsheet i made it takes just two basic inputs. The first one is that 100 investment per week and the second one is the annual return rate and i have set the annual return rate to be 20 or 20.2 percent to be precise, because at twenty point, two percent, your one hundred dollar per week. Investment becomes worth one billion, fourteen million three hundred ninety eight thousand four hundred and fourteen dollars after 57 years, and the reason is 57 years, because if you start doing your investing at 18 after 57 years, you will be a 75 year old billionaire.

Now. The calculation here is pretty simple. All i do is just add that 100 to your investments every single week and work out how much your investments grow every single week now here is the first caveat, and this is something that is really important to understand. If you want to become a billionaire through investing the reason that these numbers stack up is because of the power of cumulative growth, cumulative growth is incredible: you invest 100, and after one year it becomes 120.

Now you've earned yourself the 20 on top of the 100, because the annual return rate in this model was 20, but then, in the second year that same 100 that you invested at the beginning now becomes worth 144 dollars. So it grows by 24 instead of 20. In year, two and in 10 years that same initial 100 is earning you 103 dollars in just the interest, so you're earning more per year than you initially put in. So you can see how very quickly the effect of compounding becomes incredibly powerful, and this also means that you don't get rich.

Quick, investing is a way of getting rich slow. It is an incredibly effective way of getting rich, but it is slow. Look at this table over here after one year, your investments are worth five thousand eight hundred and thirty eight dollars, not quite a billionaire yet and even after the first ten years, you're still on just 151 000. I mean that is not bad at all, but it's not quite one billion yet because of how our brains work, people actually find it really difficult.

People really struggle to understand how non-linear growth works when we think it takes 57 years to become a billionaire. For example, we naturally assume that, probably somewhere around halfway we're maybe on a few hundred million dollars, but that is just not how it works. After 30 years out of those 57, your portfolio will still only be worth seven million dollars. So after 30 years you only have 7 of your billion and even after 50 years, 50 years out of 57 you're still only about a quarter of the way there and the truth.

Is it doesn't matter if you're trying to become a billionaire or have some other investing target? This is generally how investing works. This is how cumulative growth works. Look at the famous example of warren buffett. His wealth followed pretty much exactly this kind of trajectory and even when he was in his 40s, he didn't even have 0.1 of the total amount of wealth that he has now now.

Having said that, it is time to discuss the second caveat, and this is the big one. I am guessing. A lot of people will point this one out in the comments, because i have set the rate of return in here to be 20, and that is a lot i know i know there are going to be a lot of people out there who genuinely expect to Get a gazillion percent return on their investment, but in the real world 20 per year on average is a very high rate of return. The stock market overall tends to return around 10 percent over the long term.

It is actually very very difficult to get near to 10 in any given year. Typically, you will have some years where you're going to be making 20 or 30 really really strong years, and then you'll have other years, where you're going to make nothing or maybe lose 5 to 10 or even more so in order to get 20 a year. You have to not only beat the stock market, but you have to absolutely smash the stock market consistently, and that is not easy. Very few investors out there achieve consistent returns of 20 per year or more over the long term.

In fact, 95 percent of actively managed funds that try and beat the s p 500 fail to beat the s p 500 over a period of 20 years or longer. So almost every fund out there fails to do it, and even warren buffett himself only had an average rate of return of 8.75 per year in the last 25 years since 1997, and that included one of the biggest bull runs in history over the last few years. So even warren buffett lost to the stock market over that period of time the stock market got 9.26, so yeah, if you do, want to become a billionaire. There is the slight caveat that you have to hit extraordinary rates of return on a consistent basis and although it is difficult there have been fund managers in the past that achieved well above 20 returns over long periods of time that included major market crashes.

Benjamin graham got a return of around 20 from 1936 to 1956, probably the most volatile period in the history of the stock market. George soros hit an average of 30 percent over three decades and peter lynch also got an average of 29 and as a retail investor, you have an advantage over funds. In some ways you don't have the analysts they have. You don't have the sort of insight they might have, but you're also not regulated and not bound by the same restrictions.

You don't have to manage risks and adhere to investing practices that a regulated fund has to and in some ways those things may be good. But in other ways they may also hamper the ability of those funds to grow more quickly. You don't have to diversify in exactly the same way as a fund that manages client money has to so to cut a long story short. It is hard, but it is not impossible.

So if you follow a robust, long-term investing strategy, then that's you 20 a year, however hard that is, and you invest 100 a week from your 18th birthday, you will hit 1 billion dollars at 75, but here is the next big caveat. If you do not hit the 20 per year rate, you can't just go and put a bit more money in to make up for the difference. The return on your investments is way way way more important than how much money you put in every week, and i know that sounds really strange. It sounds kind of odd, but let's say you take your 100 a week and just invest it in the s.

P. 500, that will get you a needs 12 and a half million dollars in the same 57 years. Assuming you get the typical 10 return on average per year, so you can quickly see the big difference and even if you doubled your money and put in 200 per week, instead of 100 you're still going to be just shy of 25 million dollars at the end. You'll have almost double the money after one year, it's gon na be 11 000 if you're putting in 200 a week instead of 5800 with 100 a week, but the lower rate of return means that the compound effect is just not there.

In fact, even if you put in 2 000 per week and we're getting a 10 return per year, you'll still only have 249 million dollars in 57 years. Now i know just is maybe not the right word here, but we're comparing to one billion. If you stick your money in sp 500 and you want to hit that one billion dollars by 75 you're going to need to invest 8 200 a week and that's going to be a little bit more difficult for most people than just 100. But if you do have a hundred dollars to invest every week - and you do figure out a strategy that gets you that 20 return per year, then that is about all you need to do to join the oligarchs and the tech entrepreneurs in the billionaire club.

If you found this video useful, please don't forget to smash the like button for the youtube algorithm. Thank you so much for watching. I really really appreciate it and, as always i'll see you guys later, you.