Thread by @Camp4

📈 How to get rich with a 9-to-5
(2 big secrets of compounding)

Hear me out & this 🧵 may change the way you think about money. And at the end there's a way to get access to killer investments.

👇

There’s a lot of talk about compounding on this site. Most people understand the basic concept—small gains become exponential over time—but few really understand the math behind compounding.

Let's make compounding simple so you can build wealth like the smartest investors ⬇️

The first thing you need to know is that compounding is highly sensitive to the *return rate*, which is simply how fast your investment grows each year. For example, the average annual return of the S&P 500 index since 1957 is about 8%.

So if you had invested $10,000 in the S&P back in 1957 it would be worth about $1.4 million today. That’s compounding.

You don’t need to understand the math—just know that *small changes* in the return rate produce HUGE differences in the wealth you can build over the years.

Compounding at 8% is nice—it’s what our outdated retirement paradigm is based on—but compounding at 20% is an entirely different animal 🦍

👀The chart below might bring the numbers to life for you.

👉“Thanks for the math lesson Kevin but why should I care?”

2 BIG REASONS...

1️⃣ Here’s a secret that most people don’t know: Consistent 20%+ returns w/ low risk are commonplace in real estate. Many GP’s (people who put together & manage RE deals) have averaged over 20% returns to their LPs (people who invest passively in deals) for a decade or more.

I’ll make it personal: All of the RE GPs I invest with have consistently delivered returns in this range.

@L5Investments, a multi-family GP I’ve invested with for years, has averaged a 36% ROI since 2009. (@L5Investments is new to twitter so give them a follow).

Remember, as an LP you’re a silent investor—there’s no work involved beyond finding great GPs to invest with (more on that below). Let the pros do their work!

I won’t get into the details of why RE consistently produces these returns but it boils down to leverage plus steady appreciation in the underlying asset plus cash flow.

If you own a home you’ve experienced the benefits of leverage...

...you've probably returned over 20% annually on your 🏠 investment (down payment) because you used leverage (a mortgage, which is typically 20-1 leverage) and your home has slowly appreciated.

☠️Leverage is dangerous when you use it to buy volatile assets (like stocks) but...

...for assets that appreciate steadily it’s like magic, multiplying your returns.

👉That’s why RE is special as an investment class—over the long term it steadily appreciates, even through economic downturns. (It's also a good hedge against inflation.)

This sounds great, but there are a few problems:

➡️Most people don’t have access to the best RE deals
➡️There are usually minimum investment amounts, making these deals inaccessible for the non-wealthy
➡️When you invest your money is tied up for years (i.e. it’s not “liquid”)

I’m passionate about democratizing RE (increasing access & liquidity) and am working with startups like @RealtyBits that are making RE investing as easy buying & selling stocks. It's early days but keep reading for a way to get into great deals now.

2️⃣ Here’s another secret to compounding: If you can compound at a high rate of return, it blows up the tired old retirement paradigm & changes the game for 9-5 workers.

People love to hate on 9-5’s, but if your job…

💵Pays well (enough to cover expenses & save $)
🏠Is remote (eliminates commutes & cubicles which crush souls)
😊Is halfway fulfilling (you’re learning & don’t work with jerks)

…then your best play may be to stay the course, save 20% of income (hard but possible) and COMPOUND like a boss.

You’ll avoid most of the headaches & risk that come with owning a business & if you’re disciplined you’ll become financially independent WAY faster than you think.

I *really* wish I’d known these simple things when I was in my 20’s. But the good news is it’s never too late for this strategy! And I want to help you get started…

I’m working on something that would allow you to compound with the best GPs. It’s part of a new business I’ve been working on for over a year (and will reveal soon).

Sign up & you’ll be first in line to try this out 👇

Sign up using this link ⬇️

docs.google.com/forms/d/e/1FAI…

Thanks for reading. I hope this thread inspired you to get serious about compounding!

If so, please RT & spread the word!

🤙

My friend @ZubyMusic suggested I clarify what GPs & LPs are:

Each RE deal is typically set up as it's own entity (an LLC).

General Partners (GPs) actively manage the entity/deal while the Limited Partners (LPs) are passive investors with no active role in managing the deal.