How to turn your life around with a capital of 100,000? Investment guide for small investors

The Harsh Reality: Why Investment Is a Must

At the end of the year, a painful truth emerges—price inflation far exceeds salary growth. Egg prices double, food costs rise by 20~30%, and mortgage rates have increased from the pandemic low of 1.31% to 2.2%. For a million-dollar mortgage, this 0.89% difference translates to an additional annual cost of 89,000.

All signs point to the same conclusion: passive waiting for salary increases is no longer enough to combat inflation. Proactive investing and financial management have become a necessity, not an option.

However, investing is not a complex financial game; fundamentally, it’s similar to running a small business—requiring a perfect combination of mindset, projects, and time.

Step 1: Know Yourself and Set Goals

Many people rush into the market with their first spare cash, often resulting in losses. The root cause is a lack of preparation.

Keeping accounts is the foundational homework of investing. Treat yourself as a company—understand your monthly income and expenses, identify areas to increase income or cut costs, and estimate your true available cash flow for investment. This isn’t about saving money for its own sake, but ensuring that all market investments are made with “idle funds”—money that won’t affect your quality of life even if prices drop.

Setting clear investment goals is equally crucial. “Increasing account balance” is too vague; people tend to give up easily. But if your goal is “earning 600 yuan per month in passive income to pay for your phone” or “saving 50,000 yuan in a year for travel abroad,” you’ll have concrete motivation to push yourself.

Step 2: Understand Three Types of Investors and Corresponding Strategies

Stable Income — Choose Cash Flow Investments

Employees, civil servants, and others with predictable income are best suited for dividend-focused funds or high-yield ETFs.

The advantage of these assets is stability. Many funds offer dividend yields of 7~8%. Investing 100,000 yuan can yield 7,000~8,000 yuan annually, averaging 600~700 yuan per month. The longer the time horizon, the more pronounced the compound effect—if you invest 100,000 yuan annually and reinvest dividends, after 13 years, the annual dividend could reach 100,000 yuan; after 25 years, the average monthly income could exceed 18,000 yuan, enough to support a comfortable retirement.

High Earners — Focus on Asset Appreciation

Doctors, engineers, and other high-income groups don’t need to rush to cash out investments; instead, they should focus on index ETFs, such as Taiwan’s 0050 (tracking the top 50 Taiwanese companies) or the US’s SPY (tracking the S&P 500).

These ETFs automatically weed out weaker companies—industry leaders from ten years ago (like General Electric) have been replaced by Apple, Microsoft, and others, but the index always tracks the strongest companies at the time. Historical data proves their effectiveness: the S&P 500 has an average return of 8~10% over the past 100 years. Over 10 years, 100 yuan with a 10% annual return can grow to 236 yuan, far surpassing a 5% fixed deposit of 155 yuan.

SPY has surged 116% in the past decade, despite multiple crashes—such as the dot-com bubble in 2000, the 2008 financial crisis, COVID-19 pandemic in 2020, and inflation in 2022. Each time, it rebounded to new highs. High-income individuals can withstand volatility, and the returns after fluctuations are more substantial.

Real estate leverage is also worth considering. A 10 million yuan property with a 2 million yuan down payment, appreciating to 12 million yuan in five years and then sold, after deducting interest costs, yields a 50% return—much higher than the simple 20% profit from buying and selling. Low-interest loans are an advantage for high-income groups.

Time-Rich — Seize Short-Term Opportunities

Students, salespeople, and others with flexible schedules can try aggressive investments, seeking short-term opportunities by understanding market trends—more akin to speculation than investment.

For example, the US interest rate hike cycle has peaked; future rate cuts and QE are inevitable, increasing dollar supply and risk of depreciation. Shorting the dollar during the final rate hike window has a high success rate. Simultaneously, a weakening dollar will boost crypto assets, making buying Bitcoin profitable.

Or focus on policy hot spots—when the government announces open travel for mainland tourists, travel-related stocks may surge; breakthroughs in AI technology can lift AI concept stocks. By grasping “news” and predicting “major capital flows,” you can follow the trend and profit—this is the core logic of short-term speculation.

Step 3: Select Five Major Investment Targets

1. Gold — The King of Hedge Against Inflation

Over the past 10 years, gold has increased by 53% (annual average 4.4%), effectively resisting inflation and currency depreciation. The biggest gains occurred during 2019–2020 and 2023–2024, driven by the pandemic, rate cuts, and geopolitical risks. Gold pays no dividends; returns come solely from price differences, but its safe-haven nature is especially valuable during market turmoil.

2. Bitcoin — The Volatility King

As of January 2026, Bitcoin (BTC) is priced at $92,080. Its past decade’s surge is astonishing but difficult to replicate—waves of exchange failures, geopolitical-driven remittance demands, dollar depreciation expectations… each rally has different logic.

Recent positives include Bitcoin halving, spot ETF approvals, and policy tilt, offering short-term upside. But long-term, expecting a 170-fold increase again is unrealistic; a “buy on dips, reduce on peaks” strategy is advisable. Bitcoin’s huge volatility means it shouldn’t exceed 5% of your total assets and is better suited as a speculative tool rather than a store of value.

3. 0056 — Taiwan’s High-Dividend Stock ETF

Taiwan’s most well-known high-dividend ETF, mainly investing in stocks with generous dividends. Over the past 10 years, dividends increased by 60%, and stock prices rose by 40%, doubling total returns. Its strategy focuses on high yields, with Taiwan’s dividend yield stable around 4%. Future 10-year performance is expected to mirror the past.

Investing 100,000 yuan conservatively could grow by 40,000 yuan in 10 years, with annual dividends of 6,000 yuan. But with a “yearly 100,000 yuan fixed investment + reinvested dividends” compound strategy, after 13 years, annual dividends could reach 100,000 yuan, enough for a modest but comfortable life. For salaried workers, this is the most practical path to financial freedom.

4. SPY — The US 500-Company Tracker

Tracks the top 500 US companies, with a dividend yield of only 1.6% (about 1.1% after tax). Returns mainly come from capital appreciation. Over the past 10 years, it surged 116%—from $201 to $434. Investing 100,000 yuan yields only 1,100 yuan in dividends annually, but after 10 years, assets reach 216,000 yuan.

This exemplifies the power of compound interest. Investing continuously for 30 years with an 8% annual return, an initial 100,000 yuan can grow to 1 million; total invested 3 million, final assets reach 12.23 million. The entire process is almost risk-free—so long as the dollar remains the global settlement currency and the US doesn’t go bankrupt, assets will steadily grow.

The cost is patience—almost no cash flow in 30 years, relying solely on asset appreciation. Suitable for those with stable income who can hold long-term.

5. Warren Buffett — The Holy Grail of Compound Interest

Berkshire Hathaway, Warren Buffett’s flagship company, has a unique profit model: accumulating float from insurance companies, using low-interest financing to arbitrage high-yield investments. For example, issuing 0.5% annual interest bonds in Japan to buy Japanese stocks with 3~4% dividends, the interest spread is profit. In the US, issuing 30-year savings bonds to fund government bonds, as long as the interest spread exists, arbitrage can continue.

This model is not about Buffett himself but a systematic corporate strategy that will persist even after him. Therefore, BRK is the top choice for investors seeking “all earnings reinvested for growth.”

Step 4: Create Your Own Action Plan

No single method suits everyone. The key is to find a risk-reward-time investment mix that fits your profile.

Choosing the right direction is more important than blind effort. For example, an employee forced to focus on short-term trading techniques at the expense of their main job may end up losing their monthly salary for a small speculative gain—an unwise trade-off. Conversely, a time-rich speculator who only invests in compound growth might miss monthly arbitrage opportunities.

The reality is harsh but fair. Time is the best partner for compound interest. As long as your mindset is clear, projects are chosen wisely, and patience is sufficient, turning 100,000 yuan into millions or tens of millions is not a dream but a matter of time.

The starting point doesn’t matter; persistence does.