## How to Achieve Financial Freedom with 100,000 Principal? Three Core Elements Every Small Investor Must Know

The end of the year is approaching, and soaring prices have become the norm. Eggs have risen from 5 yuan to 10 yuan, bubble tea and lunch boxes have increased by 20~30%, and mortgage rates have climbed from the pandemic low of 1.31% to 2.2%. For a 10 million mortgage, the interest difference alone adds up to an extra 89,000 yuan annually. Under this wave of inflation, relying solely on salary is no longer sufficient to keep up with living costs. **Financial management and investment** are no longer optional but essential.

Many people become overwhelmed after saving their first 100,000 yuan. In fact, starting a wealth plan with 100,000 yuan is not out of reach; the key lies in mastering the three major elements of **mindset, targets, and patience**.

### Start by keeping accounts to build investment discipline

The first step in wealth accumulation is not stock picking but understanding your cash flow. Treat yourself as a business, accurately tracking income and expenses to identify the truly "idle money"—funds that are not used and do not affect your daily life.

The prices of investment targets do not rise in a straight line. If forced to sell during a downturn, long-term asset growth will inevitably suffer. Therefore, the habit of keeping accounts directly determines how far your investments can go. Through accounting, you can discover fixed monthly expenses (communication fees, utilities) and planned expenditures (travel, electronics), and then match different financial plans to different types of spending.

### Personalized financial plans

**Stable job earners**: Dividend funds or high-yield ETFs are the first choices. Since salary growth is limited, choosing targets that generate stable cash flow can bring psychological satisfaction. If dividends accumulate long enough, they can even surpass your salary, effectively earning a "monthly pension." The downside is the limited effect of compound interest, but the advantage is ease of persistence.

**High-income groups**: Suitable for long-term allocation of index ETFs. For example, 0050 tracks Taiwan’s top 50 stocks, and SPY tracks the top 500 US stocks. These indices automatically perform "weeding out the weak and retaining the strong"—general electric and Ford are gradually replaced by Microsoft and Apple. The S&P 500 has an average return of 8~10% over the past century, far exceeding the 5% from USD fixed deposits. Investing 100 yuan for 10 years with a 10% annual return can grow to 236 yuan, while 5% yields only 155 yuan, nearly doubling the principal.

However, the stock market carries risks. The dot-com bubble in 2000, the 2008 financial crisis, the pandemic in 2020, and inflation in 2022 each tested patience. If you need to access this money midway, you must sell at a loss. Therefore, this plan is more suitable for those with strong risk resistance.

**Time-rich individuals** (students, salespeople): Can try short-term thematic trading. The US interest rate hike cycle is nearing its peak, and future rate cuts or even QE are expected, increasing USD supply. Shorting the dollar at this time has a high success rate. A declining dollar will also stimulate virtual currencies. Additionally, policy positives (such as opening up free travel for mainland tourists) often trigger concept stock speculation. By monitoring news and current events to predict major capital flows, you can profit from market over-optimism or pessimism. This kind of speculation relies on market reactions and requires constant monitoring.

### Practical analysis of five major targets

**Gold (XAU)**: Appreciated 53% over the past 10 years, with an average annual return of 4.4%. Gold has no dividends; its gains come solely from price differences. Its safe-haven property becomes more prominent during economic instability. Major price surges (mid-2019 to mid-2020, and 2023~2024) coincided with COVID-19, US rate cuts, and the Russia-Ukraine war.

**Bitcoin (BTC)**: Has surged astonishingly over the past decade. The current price is $87.42K, with some correction from previous highs. Bitcoin also has no dividends; returns depend entirely on price differences. Each period’s positive and negative factors are new—exchange failures, geopolitical issues, demand for dollar substitutes, etc. Don’t expect another 170-fold increase to 6 million USD in the next 10 years, but short-term positives (Bitcoin halving, spot ETFs, friendly policies) do exist. It’s advisable to buy at lows and reduce holdings appropriately at highs, avoiding overexposure to Bitcoin in your total assets.

**0056 (Taiwan high-yield ETF)**: Focuses on high-dividend stocks, with profits almost entirely paid out as dividends. Over the past 10 years, dividends accounted for 60%, and stock prices increased by 40%, doubling the assets. If you save 100,000 yuan annually, after 13 years, dividends alone will reach 100,000 yuan/year; after 25 years, it will rise to 220,000 yuan/year, enough to support semi-retirement. Since dividends can be spent, the more you save, the more motivated you are.

**SPY (US S&P 500 ETF)**: Tracks the top 500 US companies. Over the past 10 years, it rose from 201 to 434, with a return of 116%. The dividend yield is only 1.6% (1.1% after tax), with most gains coming from asset appreciation. Investing 100,000 yuan for 10 years can grow to 216,000 yuan; over 30 years, it can reach the million level—accumulating a total principal of 3 million over 30 years, ultimately reaching 12.23 million. This kind of compound interest is almost risk-free as long as the US dollar remains the global settlement currency; the US will not go bankrupt, and assets will grow steadily. The downside is limited cash flow during the period, requiring stable income support.

**Berkshire Hathaway (BRKB)**: Warren Buffett’s company, the holy grail for compound investors. Its profit model is replicable: accumulating funds through insurance companies or leveraging good credit for low-interest arbitrage. For example, issuing 0.5% low-interest bonds in Japan to buy Japanese stocks, where dividends often exceed costs; or issuing savings policies in the US to raise funds for 30-year government bonds, profiting from the interest spread. This model does not depend on Buffett’s presence; as long as the management strategy remains unchanged, profits can continue.

### Choosing the right direction is more important than blind effort

Most of the above targets can be started with just a few thousand Taiwan dollars, whether through regular fixed investments or one-time speculative investments, making them very accessible. Time is the best friend of compound interest.

The key is to choose a plan that matches your personal situation. No matter how perfect a plan is, if it doesn’t suit you, following it is just a compromise. **The only way to build long-term wealth is to find a method that suits you, offers the highest returns, and minimizes risks.**

Once your mindset is correct, targets are suitable, and patience is ample, turning small investors into millionaires is no longer a dream but a matter of time.