A former banker has outlined a strategy he calls "The Crazy Plan," asserting that consistent, long-term investments as small as £50 per month could transform grandchildren into billionaires within approximately 80 years. Tim Taubman, who has been a private investor since 2010, developed the concept while planning his family's financial legacy.
Taubman's plan centers on two fictional portfolios: a lump sum investment of £10,000 and a monthly investment of £50 over ten years. Both aim to reach a $1 billion target. His calculations currently project the lump sum plan reaching the billion-dollar mark in about 76 years and five months, and the monthly plan in roughly 86 years and one month. This projection assumes an ambitious annual return of 15 percent.
Expert Analysis and Realistic Projections
Financial experts acknowledge the power of compound growth over extended periods but express skepticism about the feasibility of consistently achieving a 15 percent annual return. Charlotte Kennedy, a financial planner at Rathbones, stated that while high returns are possible, they are significantly beyond what many investors can realistically expect. For context, the FTSE World Index has averaged a 9.64 percent annual return over the past 22 years, and historical data suggests global stocks have returned around 5 percent annually over the long term.
If a more conservative 10 percent average annual return were achieved, Taubman's initial £10,000 investment, under his plan's timeline, would grow to approximately £21.1 million after 80 years, rather than a billion dollars. Financial planners note that achieving such high returns typically requires aggressive investment strategies and a high tolerance for risk.
Shifting Focus to Personal Wealth Accumulation
For individuals prioritizing wealth accumulation for their own retirement rather than for future generations, the investment horizons and outcomes are more attainable. A 25-year-old following the monthly investment plan, assuming a consistent return, could accumulate a pot of $1.1 million (£806,000) by age 65. An initial £10,000 investment could potentially grow to $3.8 million (£2.79 million) for retirement, in addition to pension savings.
Taubman's personal portfolio, which he manages daily, reportedly yielded returns of 27 percent annually, surpassing his own aggressive target. This portfolio is heavily weighted towards U.S. and technology stocks, including investments in funds like Allianz Technology and Scottish Mortgage, which have shown significant growth in recent years. However, Taubman acknowledges that such a tech-heavy approach can be volatile and may need to adapt to market performance over time. He advises investors to consider long-term returns in sectors like technology, rather than focusing on short-term fluctuations.