The World’s Greatest Get-Rich Formula

This article is paraphrased from a 10/12/07 Motley Fool article:

You should be highly skeptical of any and all get-rich schemes … except for the super-simple formula I’m going to show you below. Because this one really works.

It works so well that it’s been used by the world’s billionaires — from moguls of yesteryear such as Rockefeller and Ford to today’s tycoons Carlos Slim and Warren Buffett. But enough already. Let’s get to the formula.

The formula

It is, simply: FV = PV * (1+r) ^ n


FV = future value
PV = present value
r = rate of return
n = time (or number of years)

Compounding 101
Now, some astute finance brains will know that equation not as some mystical secret but as the “future value of money” (FVM) equation taught in college.

The FVM formula simply states that your future wealth (FV) is a function of three variables: the amount of money invested today (PV), the rate of return generated (r), and the length of time in which that money is put to work (n). So maximizing future riches requires three steps.

Step 1: Increase PV
It takes money to make money. But by actively and consistently slivering off a portion of your earnings every month to save and invest, you’ll have more and more of that money working for you.

All things equal, the greater amount you invest today (PV), the greater wealth you’ll build for tomorrow (FV).

Step 2: Increase r
Next, you’ll need a way to grow that capital. Historically, the stock market has been the most effective wealth-building vehicle of all. Plowing your money into a low-cost index fund wouldn’t be a bad idea. All things equal, the greater your rate of return (r), the greater wealth you’ll build for tomorrow (FV).

Step 3: Increase n
The last ingredient in our super-simple wealth building recipe: maximum time in the market.

Look back at the equation. You’ll see that n is an exponential function — meaning that for every year you’re not invested, you give up the awesome (almost magical) benefits of compounding.

All things equal, the longer you’re invested (n), the greater wealth you’ll build for tomorrow (FV).

The final Foolish variable
So don’t waste another “n.” Start plugging whopping returns into your own real-life wealth equation today.

3 Responses to The World’s Greatest Get-Rich Formula

  1. RichFormula says:

    Have a look at my version of the RichFormula. From Russia with Love.

  2. Ian says:

    thank’s! more power

  3. Ian says:

    thank’s! more power your my mentor

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