Small Capital Launches Wealth Engine — A 100,000 Yuan Investment Allocation Manual

Year-end is approaching, and the continuous rise in prices has become a personal experience for most people. From daily expenses to large expenditures, inflation is everywhere: egg prices doubled, dining-out costs increased by 30%, and mortgage rates soared from 1.31% during the pandemic to 2.2%. For a ten-million-dollar mortgage, this interest rate difference alone results in nearly NT$90,000 in annual expenses. In such an environment, investment and wealth management are no longer optional but a necessity.

Many see saving their first NT$1 million as a milestone, but for newcomers just entering the workforce, it may seem out of reach. Why not start with the NT$100,000 in hand—if managed properly, through correct investment mindset, suitable targets, and compound interest over time, it can be the critical first step toward wealth accumulation.

Three Paths to Wealth for Different Types of Investors

The essence of investing is no different from running a business; the core elements are three: mindset, targets, and time. Different life stages and financial situations determine the most suitable investment approach.

Stable Income Type: Use Time to Gain Space

For salaried workers with regular schedules and predictable income, the best options are dividend-paying funds or high-yield ETFs. These products are like creating a monthly pension for oneself—over time, dividend income may eventually surpass the primary salary.

Take 0056 as an example: over the past ten years, it has yielded a 60% total dividend payout and a 40% stock price increase. If NT$100,000 is invested annually, even if all dividends are spent, after thirteen years, the annual dividend could reach NT$100,000, and after twenty-five years, it could be over NT$220,000 annually. Coupled with pension systems, retirement life will become increasingly comfortable.

The advantage of this approach is that returns are quickly tangible and easy to maintain, making it most suitable for conservative investors.

High-Income Group: Harness the Power of Compound Interest

High earners like doctors and engineers do not need to withdraw cash flow from investments immediately; they are more suited to tracking broad market indices via ETFs, such as Taiwan’s 0050 or the US’s SPY.

For example, SPY has increased by 116% over the past decade, with an average annual return of about 8%. Although the dividend yield is only 1.6% (even lower after tax), the main gains come from capital appreciation. If you persist for thirty years, starting with NT$100,000 and adding NT$100,000 annually, the final amount could surpass NT$10 million.

The advantage of index ETFs is their automatic “weed out the weak and keep the strong”—when industry leaders like General Electric, Ford, Microsoft, and Apple take turns leading the market, the index adjusts itself and follows the strongest. As long as the global economy continues to operate, the long-term returns of such investments are relatively certain.

Of course, stock market volatility is inevitable. The dot-com bubble in 2000, the 2008 financial crisis, the COVID-19 pandemic in 2020, and the inflation crisis in 2022 all caused significant asset retracements. But those who can withstand these moments are often the investors with stable income.

Time-Rich Type: Speed to Gain Rewards

Students and salespeople with flexible schedules can try more aggressive strategies—creating returns not through time accumulation but through turnover rate.

For example, when the US rate hike cycle approaches its end and a new round of easing and rate cuts is expected, dollar supply will increase. Positioning early to short the dollar has a high success rate. A weaker dollar will also stimulate demand for cryptocurrencies, such as Bitcoin, which could benefit.

In the stock market, thematic hype cycles appear periodically—revival of tourism, AI applications, green energy transformation, and more. By grasping current trends and following major capital flows, profits can be made through short-term themes and hot spots. This is speculation, not investment. It requires constant monitoring and diligent information gathering, but because the investment cycle shortens from years to months or even weeks, small capital can grow quickly.

Five Key Targets for NT$100,000 Investment

After understanding which investment type suits you, what specific products should you choose? Here is an analysis of each.

Gold: An Ancient Store of Value

Gold itself does not pay dividends; all gains come from price differences. Over the past ten years, gold has increased by 53%, averaging 4.4% annually, effectively countering inflation and currency depreciation.

Significant price surges occurred mainly from mid-2019 to mid-2020, and again from 2023 onward. These periods coincided with major events like COVID-19, US rate cuts, and geopolitical tensions. When risk assets fluctuate wildly, gold’s role as a safe haven becomes most evident.

Bitcoin: Opportunities in Volatile Assets for Speculation

Over the past decade, Bitcoin has surged over 170 times, but each rally was driven by different catalysts—panic selling after exchange failures, increased cross-border remittance demand due to geopolitical tensions, or a substitute for declining dollar trust.

It’s hard to predict if such astonishing gains will recur in the next ten years, but short-term prospects are favorable. Currently, Bitcoin benefits from halving events and the development of spot ETF mechanisms. However, Bitcoin is inherently highly volatile, suitable for buying low and trimming high, and should not constitute a large portion of total assets.

0056: Taiwan’s High-Yield ETF Representative

0056 focuses on high-dividend stocks, distributing nearly all profits annually, so investors mainly earn from dividends rather than capital gains.

In the past decade, 0056 has yielded a 60% dividend payout and a 40% stock price increase. Future performance is expected to follow a similar pattern. An initial NT$100,000 investment would grow by NT$40,000 in ten years, with an average annual dividend of NT$6,000. It may seem ordinary, but if you continue investing NT$100,000 each year, the compound effect of dividends will be impressive—after thirteen years, annual dividends reach NT$100,000; after twenty-five years, nearly NT$220,000. With pension systems, this can generate a stable monthly cash flow of NT$40,000.

SPY: The Global Benchmark for US Large-Cap ETFs

SPY tracks the 500 largest US companies, with a dividend yield of only 1.6%, and even lower after foreign tax deductions at about 1.1%. But this reflects that its returns mainly come from capital appreciation.

Over the past ten years, SPY rose from 201 to 434, a 116% return, with an average annual dividend of 1.1% and 8% capital growth. Investing NT$100,000, after ten years, the value would be NT$216,000. Even if dividends are withdrawn annually, continuing to invest for thirty years would accumulate to over NT$12 million, starting from NT$100,000 and adding NT$100,000 each year.

This compound growth approach carries almost no risk, assuming belief in the US dollar as the global settlement currency and that the US will not go bankrupt—if these assumptions hold, assets will steadily increase. The downside is the near absence of cash flow, relying solely on asset appreciation, so income stability is crucial.

Berkshire Hathaway: The Investment Holy Grail of Compound Interest Masters

Warren Buffett’s Berkshire Hathaway profits by accumulating cash through insurance companies or leveraging good reputation for low-interest arbitrage.

For example, if the company wants to hedge currency risk while investing in Japan, it might issue low-interest bonds at 0.5% in Japan and use the proceeds to buy Japanese stocks. Since the cost is much lower than dividend yields, as long as principal isn’t lost, profit is achievable. The same logic applies in the US—issuing low-interest savings bonds and purchasing government bonds, arbitraging the interest rate spread.

This business model won’t change with Buffett’s age; as long as the company’s strategy remains, profits can continue. If you want all returns to compound, Berkshire Hathaway is an excellent choice.

Three Key Elements for Investment Success

Regardless of the targets mentioned, most can start with just a few thousand NT dollars. The key points are:

Mindset: Keep financial records, develop discipline, distinguish between idle money and necessary expenses, estimate stable cash flow. Treat yourself as a company—find the pairing of “investment income covering expenses.”

Targets: Choose suitable products based on your income stability, risk tolerance, and time commitment. Whether through regular fixed investments or short-term speculation, what suits you best is the best choice.

Time: Compound interest is your best friend. Even if annual returns seem modest, over years they can produce astonishing results. Only with patience can you wait for the snowball to grow larger and larger.

With all three in place, even small capital can activate a wealth engine. As long as you have good investment mindset, carefully select targets, and have patience to study entry and exit timing or wait for compound interest to work, becoming a financially free small millionaire or billionaire is just a matter of time.