TikToker Shows How Much Money You’ll Have Investing 15% Of $40,000 Over 40 Years

investment growth as a plant

Compound interest shouldn’t be thought of as a mystifying phenomenon. It’s not magic – just healthy financial habits applied to practice.

It’s really just the following factors coming together for one’s wealth-building:

  • Basic math
  • Personal savings discipline
  • Utilizing the proper financial vehicles for savings, like a Roth IRA
  • A quantitative analysis of historic interest rates for ROI – return on investment

Mikey Taylor is a pro skateboarder, co-founder of Saint Archer Brewing Company, and president of Commune Capital.

On TikTok, Mikey does an excellent job breaking down why it’s important to start proper savings habits early.

Rule Of Thumb – Save 15% For Retirement

Fidelity’s well-documented rule of thumb for retirement savings is 15% of your income. We previously broke this down with another way to thinking about retirement milestones based on your age range.

Let’s say you make $40,000 a year and invest 15% – $6000 a year – for 40 years.

In under a minute, Mikey plugs the numbers to explain how this makes you a multimillionaire: $6,000 a year grow at an average historic interest rate of 10% in a Roth IRA comes out to $3,000,000 in savings.

He adds in the comments:

The average annual return for the last 10yrs: 13%. 30yrs: 10.7%. 50yrs: 10.9%

Reinforces why savings habits are so important at an early age, especially in one’s 20s and fresh in the workforce.


#greenscreensticker #greenscreen It’s why it’s important to start early! #wealth #stocks #stonks #daytrader #crypto #moneytok #learnontiktiok

♬ Back To Black – Amy Winehouse

The math checks out, though the algorithm of life itself certainly has many other variables. One commenter points out that the after-tax income on $40k, with $6,000 going to saving, is only $25,000. That’s not a lot of money to live on in most of the United States. It’s hard, but not impossible.

It just reinforces why it’s so important to learn how to live a lot on a little from an early age.

That’s the main takeaway with Mikey’s TikTok.

Let’s talk about gains

Another commenter on TikTok asked “where the heck can u find an index fund with a 10% return?”

This is another topic we’ve covered: SPY has a historical average annual return of the last 15 years is 10.80%. VTI has a 15 year return of 10.50%. Mikey’s math appears to be based on the historical averages of these ETFs.

Another consideration:

One’s income – hopefully – grows as one advances through their career path, making saving easier. Also, it doesn’t consider any potential employer benefits for retirement, like matching a 401k. Adrian Brambila, for example, built a $4 million net worth by the age of 32 with some simple saving and spending strategies.

Fortunately, we live in an era where set-it-and-forget-it robo-investing apps like Acorns can help build good habits for saving money.

B. Carlisle

Contributing editor at Wealth Gang. An entrepreneur at heart, he's passionate about meaningful ways to leverage technology and social media for business opportunities and side hustles.