Former banker Tim Taubman has revealed an investment strategy that he believes can turn the grandchildren of everyday savers into billionaires, arguing that vast wealth is not solely reserved for entrepreneurs like Elon Musk and Jeff Bezos.
The 55-year-old private investor claims that by investing a lump sum of £10,000, or committing to regular savings of £50 a month, families can build a $1 billion (£733 million) fortune over 80 years.
Taubman has been a private investor since 2010. Since the beginning of 2024, he has published his research portfolio on his blog, The Crazy Plan, tracking two different strategies to reach the billion dollar mark. He devised the idea several years ago when planning his family's finances and considering the legacy he wanted to leave behind.
He calls his two strategies the lump sum plan and the monthly plan. The lump sum option involves investing £10,000 on day one and leaving the money to grow. The monthly plan is designed for people without a lump sum who can afford to save £50 a month over a ten-year period.
To track the performance of his strategies, Taubman invests fictional money into a unit fund he calls the Crazy Fund. The unit fund consists of ten different investments.
Over the past two years, Taubman says his fictional portfolio has amassed £22,929. He expects it to hit the billion mark in as little as 76 years and five months. At that point, Taubman would be 131 years old if he followed the plan himself.
Ambitious growth targets
To hit the $1 billion target in 80 years, Taubman's calculations assume an annualised return of 15 per cent.
He says his investments have actually outpaced this target, achieving returns of 27 per cent each year. Factoring in fees, he now expects the lump sum plan to hit $1 billion in another 76 years and one month. He expects the monthly investment plan to reach the $1 billion mark in 86 years and one month.
Taubman acknowledges the extreme time frame, which requires investors to be comfortable never spending the money so their descendants can reap the rewards. However, he believes the headline figure shows what is possible.
"Having that headline figure makes people realise that opportunity is there," he says. "It's about setting yourself and your family up for future generations."
"I want people to realise they can set out on a journey to wealth, for some that might be building a £5,000 pot, for others it might turn into millions," he adds.
When Taubman started the experiment, his initial calculations showed the lump sum plan taking 79 years and 11 months to reach $1 billion, while the monthly plan would take 89 years and three months. Under those initial timescales, a 25-year-old starting today could reach a billion by the age of 104.
Focus on technology and growth
Taubman's portfolio is focused on growth rather than income, with a large exposure to technology stocks and the United States market. Growth-focused funds target companies expected to grow faster than the rest of the market, although this strategy can bring higher volatility.
He previously invested in single stocks, but switched to funds in recent years because stock picking is "really hard work" and requires extensive research. He notes that picking individual stocks carries the risk that one poor performer can damage overall returns.
His portfolio now contains a mix of investment trusts and exchange-traded funds, which track the performance of a specific stock market.
His holdings include Allianz Technology and Scottish Mortgage, which are two of the most popular funds among United Kingdom investors.
Scottish Mortgage has returned 135.1 per cent over the past three years. The investment trust's top holdings include the space exploration company Space X and ByteDance, the parent company of the social media platform TikTok.
Allianz Technology has returned 183.9 per cent in three years, holding stakes in companies including the semiconductor manufacturer Nvidia.
Taubman acknowledges his portfolio is heavily weighted towards technology, and says he could change this over time if another sector performs consistently well.
"Look at the Polar Capital Technology trust," Taubman says. "You can go back 30 years and see the returns. People tend to look too short term when they look at technology."
Expert reaction
Financial experts have cautioned that Taubman's 15 per cent target is highly ambitious and requires an aggressive investing strategy with a high tolerance for risk.
Charlotte Kennedy, a financial planner at the investment management firm Rathbones, warns the target may be difficult to reach.
"While some have achieved returns at this level over long periods, it is significantly higher than those that many investors would expect," Kennedy says.
However, she adds: "Compound growth is incredibly powerful over very long periods and, given enough time, even relatively modest sums can grow into very large amounts."
By comparison, the FTSE World Index, which tracks the performance of large and mid-cap stocks globally, has generated an annualised return of 9.64 per cent over the past 22 years.
The Swiss bank UBS publishes an annual Global Investment Returns Yearbook analysing market data back to 1900. It estimates average annual real returns from global stocks to be around 5 per cent a year over that period.
If an investor secured a 10 per cent average annualised return, the £10,000 lump sum would reach £21.1 million after 80 years under Taubman's plan.
For investors focused on building wealth for their own retirement rather than leaving money to their grandchildren, the strategies produce significant sums over a shorter timescale.
A 25-year-old following the monthly plan would build a $1.1 million (£806,000) pot by the age of 65, assuming the 15 per cent return target is met. If they invested a £10,000 lump sum today, they would have $3.8 million (£2.79 million) by age 65, in addition to any separate pension savings.
