Starting with an investment of 100,000 — Three paths to wealth for small investors

Year-end is approaching, and rising prices have become a nationwide experience. Egg prices have become normal, and mortgage rates have risen from 1.31% during the pandemic to 2.2%. Behind these seemingly small numbers lies the continuous erosion of purchasing power. In such an environment, investment and wealth management are no longer options but necessities for survival.

The key question is: with 100,000 yuan, how should it be effectively utilized?

The Essence of Investment: A Combination of Mindset, Projects, and Time

Many people mistakenly believe that investing requires a large principal. In fact, investing is like running a business—it requires clear thinking, suitable projects, and enough time for compound interest to work.

First, be sure to clarify the concept of “idle money investment”. The invested funds should not affect daily life, because no investment target rises in a straight line, and price fluctuations are inevitable. Keeping accounts should be the first step—treat yourself as a company, accurately calculate income and expenses, and assess the maximum amount you can invest.

Second, finding projects that match your life rhythm is crucial. Office workers are suitable for regular fixed investments; retirees need stable cash flow; students or salespeople can try more flexible short-term operations. The same method is not effective for everyone.

Investment Directions for Different Groups

Stable Job Holders: Dividend-paying Products Are the First Choice

People with stable but limited income should prioritize dividend funds or high-yield ETFs. These products are like a “second salary,” and long-term accumulation of dividends may even surpass the original salary.

For example, the 0056 ETF has accumulated a 60% dividend over the past 10 years, with a 40% increase in stock price. If you invest 100,000 yuan annually and stick to it for 25 years, the annual dividend will reach 220,000 yuan—enough to support retirement life. Although compound growth is slow, it is stable and reliable, making it easier to stick with.

High-Income Groups: Index Tracking and Leverage Operations

High earners like doctors and engineers have stronger risk resistance. For them, tracking major index ETFs (such as SPY) is more attractive. SPY has achieved a 116% return over the past 10 years, with an average annual return of 8%. Even without reinvesting dividends, after 30 years of compounding, an initial 100,000 yuan could grow to over 1 million.

This group can also consider leveraged real estate investments. For example, a 10 million yuan property with a 2 million yuan down payment, and a 20% increase in property value over 5 years, minus interest costs, can yield a 50% return—far exceeding the 20% return without leverage.

Those with ample time: Short-term operations to seize market hotspots

Students or salespeople with enough time can try short-term speculative trading—predicting capital flows based on news. For example, when favorable policies are announced, related concept stocks often experience short-term gains. This type of operation requires constant monitoring and information gathering, but for young people, the cost is low and opportunities are plentiful.

Comparison of Returns of Five Major Investment Products

1. Gold—Hedge Against Inflation

Gold has appreciated by 53% over the past 10 years (annualized 4.4%), mainly showing its hedging value during geopolitical events or economic crises. Significant price increases correspond to external shocks like COVID-19 and the Russia-Ukraine war. It is suitable as a defensive asset allocation.

2. Bitcoin—High Volatility and High Returns

Bitcoin has increased over 170 times in the past 10 years, but its volatility is huge, making it unsuitable as a main asset allocation. Recent positives include halving events, spot ETF listings, and policy support. Currently priced around $93,910, there are short-term trading opportunities, but long-term strategies should be “buy low, reduce holdings at high” with a maximum of 10-15% of total assets.

3. 0056—Taiwan’s High Dividend Stock

0056 focuses on high-dividend stocks, with a 60% dividend payout and 40% stock price increase over the past 10 years. The expected performance over the next decade is similar, with assets potentially doubling. If investing 100,000 yuan annually, after 13 years, the annual dividend could reach 100,000 yuan—enough to supplement main income.

4. SPY—Global Stock Market Indicator

The S&P 500 index of the top 500 US companies has gained 116% over the past 10 years. Although the dividend yield is only 1.1% (after tax), capital appreciation is the core return. Investing 100,000 yuan for 30 years can grow to over 1 million yuan through compound interest—an almost risk-free compounding model—assuming the US remains the global settlement center.

The downside is slow cash flow along the way, suitable for long-term investors with stable income.

5. Berkshire Hathaway—The Holy Grail of Compound Investing

Berkshire Hathaway, led by Warren Buffett, has a sustainable profit model: accumulating capital through insurance and bond arbitrage, and financing high-yield assets at low interest rates. Even after Buffett’s passing, this model remains effective. Its historical return stabilizes around 20%, making it the best choice for compound interest believers.

The Winning Logic of Small Capital

Although 100,000 yuan seems small, it contains enormous potential. The key is to understand Buffett’s other famous quote—if his principal were only one million dollars, his annual income could reach 50%. The advantage of small capital lies precisely in high flexibility, allowing quick entry and exit without impacting the market, and enabling rapid strategy adjustments.

With appropriate leverage and increased turnover, plus continuous investment of work income as new principal, assets will grow like a snowball. Choosing the right approach is more important than effort—finding what suits you far surpasses blindly following trends.

As long as you have the right mindset, projects, and time, the dream of small investors becoming millionaires is not far away.