How good would it be to have employees get exponentially better at their jobs every year and not cost an extra cent?

Well I have that…..with my savings.

Every year my dollars work harder and harder for me for no extra effort on my part. Until eventually, I will not need to put in any effort at all, and my employees aka money will continue to work, even if I am not. They are the best employees anyone could ask for.

Early career

In the beginning of the relationship, I was working much harder than my employees. I was putting in all the up front effort for not much return. That is OK though. It is a long term relationship that needs to be nurtured up front.

For example, if I start investing $5,000 a year from the age of 25 until the age of 55 gaining net returns of 5%, the first 10 years will look like this:

$66,034.

$50,000 from me and $16,034 from my employees. 76% from me and 24% from my employees/investment returns.

But as you can see the contributions from my employees are growing each year for no extra effort on my part. Although they are not yet at my level, they are improving.

The first year balance was 95% my contributions and just 5% my employees.

Shall we see how the next 10 years look?

Mid career

My balance is now at $173,596. Over this 10 year period, over half of returns is thanks to my employees and their investment returns. Fantastic. They are now working harder than I am.

Now for the final 10 years.

Late career

Yet again, I have made no extra effort, and my employees are now contributing towards 71% of 10 year returns.

Over the 30 year period this equates to a contribution of 57%.

If we managed to put in more each year than in this example, or invested for longer than 30 years, then our employees will do even more than 57% of the work.

Final Thoughts

In the early stages of investing, investment returns are not that important.

What is most important is just getting started. Your own contributions and time are the most important thing.

Once your investment balance gets higher, then investment returns and protection of your portfolio balance becomes more important. Even though your employees offer you much more accelerated returns than in the beginning, they can also offer just as accelerated decreases if they have a bad week, month, or year.

Once your employees are earning enough where you don’t even need to contribute you are officially financially independent. All your hard work up front has now paid off. Congratulations.

The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here