Starting with 100,000 yuan: How to create wealth multiplication through investment?

At this critical year-end moment, looking back over the past few years, living expenses have noticeably increased, from basic daily necessities to mortgage costs quietly rising. Egg prices have doubled, lunch boxes and drinks have increased by 20~30%, and mortgage rates have risen from 1.31% during the pandemic to around 2.2%. For a ten-million-dollar mortgage, these percentage point differences amount to nearly 90,000 yuan more per year. Faced with inflation continuously eroding purchasing power, investment and wealth management are no longer optional but a necessity.

The essence of investing is actually very simple—what’s needed is nothing more than the combination of correct mindset, carefully selected projects, and sufficient time. For small investors holding 100,000 yuan, this principal is enough to start a wealth accumulation journey.

Build a Foundation: First Learn How Money Flows

Many people rush into investing but overlook the most critical first step—assessing their financial situation.

Accounting is not just about recording expenses, but about managing yourself as if you were running a company. You need to precisely understand your monthly income and expenses to calculate the truly available idle funds for investment. This fund must be the part you can “set aside without affecting your life,” because investment assets are never on a straight upward trajectory. When prices fall and you urgently need cash, you might be forced to sell at a loss, which severely damages long-term asset accumulation.

Establishing a stable cash flow is essential to provide a continuous source of funds for investment. At the same time, you should consider your investment goals: Are you aiming for monthly cash flow to cover fixed expenses? Or to accumulate capital seeking a 20~30% annual return? Or long-term inflation resistance? Different goals lead to completely different investment strategies.

Three Types of People, Three Investment Models

Steady income office workers—pursuing stable dividend growth

For salaried workers with fixed but slow-growing income, high-dividend ETFs or dividend funds are the top choice. Taiwan’s high-dividend ETF like 0056 is a typical example; over the past ten years, dividends plus stock price growth have accumulated to 100%, effectively doubling the principal.

The beauty of this approach is that dividends themselves generate positive feedback. For example, investing 100,000 yuan with a 7~8% annual dividend yield can yield 600~700 yuan per month, enough to cover communication expenses. If you persistently invest 100,000 yuan each year, by the 13th year, the dividend income alone can reach 100,000 yuan annually—an effective salary increase. Although compound growth is not effective in the short term, the quick returns and ease of persistence make it most suitable for conservative investors.

High-income groups—power of compound interest and leverage

High-income groups like doctors and engineers have stronger risk tolerance, suitable for allocating ETFs tracking major indices. Take SPY as an example; over the past ten years, its stock price has risen 116%, with an average annual growth of 8%. Although dividends are only about 1.1%, the key is the compound effect—an initial 100,000 yuan invested over 30 years can grow to over a million, and with a principal of 3 million, create over 12 million in final assets.

As long as the US remains the global economic core, asset appreciation has a solid foundation. However, the downside of this strategy is the lack of cash flow during the period, relying on one’s own income to weather market downturns.

Real estate investment is also a powerful tool for high-income groups. Buying a ten-million-yuan property that appreciates 20% in five years sounds profitable with a 2 million yuan gain, but if only 2 million yuan is paid as a down payment and the rest is financed, after 5 years paying 1 million yuan in interest, the net profit is only 1 million yuan, resulting in a 50% return. Using leverage and low-interest loans effectively can greatly enhance investment efficiency.

Young people with abundant time—grasp trends to make quick money

Students or salespeople with flexible schedules can engage in short-term speculation rather than long-term investing. These players rely on keen market insights and information gathering.

For example, Bitcoin is currently in a bullish phase—halving events, spot ETFs launching, geopolitical changes all boost demand. However, Bitcoin is highly volatile; principal may shrink significantly, making it unsuitable as a main asset. But for short-term trading, timing can be very effective. Stock market “theme speculation” is also a hunting ground for such investors, like tourism concept stocks, AI concept stocks, etc., predicting capital flows based on news trends and riding the wave for profit.

Practical Analysis of Five Major Assets

Gold—Ancient wisdom for inflation hedging

Over the past ten years, gold has appreciated by 53%, with an average annual return of 4.4%. It has no dividends, relying solely on price differences, but during economic instability or rising geopolitical risks, it is the first choice for hedging. The sharp rise in gold prices in 2019~2020 and 2023~2024 corresponds to major events like COVID-19, US policy shifts, and the Russia-Ukraine war. Long-term, gold is an effective tool against currency devaluation.

Bitcoin—High volatility, high opportunity

Current price: $91.66K, 24-hour change -2.55%

Bitcoin has risen from fractions of a dollar to nearly a thousand times over the past decade, but future performance may not replicate this myth. Each wave of growth is driven by new factors—exchange failures, geopolitical demand, US dollar substitution effects, etc. In the short term, Bitcoin has bullish factors (halving, spot ETFs, friendly policies), but long-term, it’s wise to position at lows and gradually reduce at highs, controlling within 10% of total assets, due to its unpredictable volatility.

0056—Monthly dividend happiness

This Taiwan’s most well-known high-dividend ETF has paid out 60% over the past ten years, with a 40% stock price increase. Focused on high-dividend companies, capital growth is limited but cash flow is steady. Investing 100,000 yuan annually for 13 years can generate 100,000 yuan in dividends annually, gradually building passive income. After 25 years, annual dividends could exceed 200,000 yuan, greatly improving retirement life.

SPY—The compound machine of the US 500

Tracking the top 500 US companies, it has risen 116% over the past ten years. Dividends are low (about 1.1% after tax) but capital appreciation is strong, with an 8% annual growth. Investing 100,000 yuan initially and compounding over 30 years approaches one million. This almost risk-free accumulation method is the wealth-building secret of Warren Buffett, requiring only enough time and patience.

Berkshire Hathaway—Inheritance of the master of compound interest

Berkshire Hathaway’s profit model is highly replicable—using insurance cash accumulation for arbitrage. For example, issuing Japanese bonds with 0.5% interest to raise funds, then buying Japanese stocks with 3~4% yields for profit; or issuing savings insurance to fund government bonds, with the interest spread as net profit. This model remains unchanged even if the founder passes away, as long as management strategies are maintained, continuously generating steady returns—an ideal choice for compound interest investors.

The Small Investor’s Chance

10,000 yuan may seem tiny, but it’s the starting point for dreams. The key is not the size of the principal but the perfect combination of investment mindset, target selection, and time commitment.

Whether adopting dividend strategies, compound growth, or short-term speculation, understanding your own life rhythm and risk tolerance is essential. The approach that suits others may not fit you; only by finding a path that aligns with yourself and sticking to it can you see your small capital grow year by year like a rolling snowball, ultimately reaching the other side of financial freedom.