Investing: Dollar-a-Day Idea

Investing: Dollar-a-Day Idea
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Investing: Dollar-a-Day Idea
The Dollar-a-Day idea illustrates how saving small amounts of money can result in significant savings if one invests wisely. If I was to inherit one million dollars from a distant relative with the condition that I had to spend it on something other than myself, I would apply the Dollar-a-Day idea and put the inheritance in a compound interest investment for several years. Most compound interest investments are usually money market or bank-type assets that grow in value over time by compounding interest over interest: these assets increase in value through the interest of the principal and accumulated interest. Investing in these assets involves reinvesting capital gains to generate more money, either short-term or long-term, depending on the risks involved. The invested funds grow in a non-linear manner.
Even when the rate of return is not tremendous, the compound interest accumulations can turn savings or inheritance into wealth over time. One compound interest investment that I would invest the one million dollars left to me by the distant relative is the stock market. Although investing in stocks carries risks and market downturns can result in massive losses, the stock market is capable of increasing one's savings through compounding gains if approached in a disciplined manner. I would begin by identifying my trading strategy and selecting stock investments that optimize my tax efficiency and automatically make significant growths over time. I would then open a traditional IRA account since it is a very ta...