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One of the most powerful things a parent can do for their child is set them up for success by creating a legacy plan and investment strategy. And you don’t even need to be rich to provide your children and even grandchildren with valuable assets.
Take, for example, the story of how time can turn $3,000 into $50 million. In short, if you invest $3,000 in mutual funds the day your child is born and assume a 12% compounding rate, when your child is 65, they will have about $4.75 million. Then, with some clever withdrawal strategies, you can turn that $4.75 million into $6.47 million, then $30.5 million. That final, plus the $21.6 million in withdrawals, will equate to about $50 million.
Of course, this situation is completely fictional and doesn’t take into account that return rates aren’t guaranteed, that your child will likely run into situations where they need that money (or need to relinquish some of it), or inflation. But it’s an important reminder of what it matters to start saving for your children’s future now. You don’t need a lot to get started, you just need to get started.