How to turn 10k into a billion shillings!

I am going to demonstrate a simple but not easy way to turn 10k into a billion shillings! Suppose you can manage to save and invest ugx 10k daily into a simple investment fund for the next 36 years. How much do you think you will end up with?

Now this is elementary mathematics but it eludes most of us. The most common answer is simply 10k*30days*12months*36years which gives us ugx 129.6 million. Yet, the actual answer comes to about ugx 1.0 billion! So how did 10k turn into a billion shillings?

Well, it is because of compounding interest. Each 10k invested earns 10% every year, and the interest also earns 10% every year. So the whole thing keeps growing bigger. Initially, the growth is quite slow but it picks up in the last few years. You only cross the 100m mark in year 14; the 500m mark in year 29; which means than more than 500m is generated in the last seven years! The total interest you would earn comes to over ugx 947m!

Compound interest is the most guaranteed way to accumulate wealth but it requires extreme patience. You must also not interrupt the process by withdrawing cash or stopping the daily or monthly contribution.

Now this strategy is easier said than done. So you need a way to automate it and put the cash somewhere where you can never withdraw it. The best place is a pension fund like NSSF in Uganda. You automate by using a standing order from your bank to NSSF. Alternatively, you can use a unit trust like XENO and set up a daily autosave of 10k from MTN Mobile Money. You then lock withdraws in the XENO app so you can’t touch the cash. The main challenge is that this withdraw lock can be unlocked by contacting XENO so it is not sure proof. So the best place to hide this cash and never touch it is NSSF. Even if you cried tears NSSF can’t pay you this cash until you are eligible at retirement.

So we have demystified this billion thing… Anyone who can figure out how to earn and invest 10k daily can do this. Some people will argue that earning 10k daily is an impossible task. I can easily demonstrate that it is not. Most jua kali trades earn this cash. For example, a boda boda rider easily makes this cash every day. There are several online gigs that pay more than this. And you can start with 5k instead of 10k and work your way upwards.

The real question is, is it worth it? Of course, it is, because if you are able to do this you will be among the top 1% of wealthy people in Uganda. Most Ugandans can never dream of having such cash. This strategy will work best for people who are just starting out in their careers and have some time left before retirement. For older people who have missed the compounding effect, it is not too late. You can still start today. So the path to long-term financial freedom is to earn, save, and invest 10k daily for 36 years!