Let me start by being clear on saving money before I compare it to wealth building.
Saving money is a MUST. Save money to have a good emergency fund in place. Save money to buy things that you want or need: cars, house, vacation, cell phones, clothes, etc.
Having cash available in the form of savings so you can stay out of debt is your foundation of wealth building.
You need to have money available for life while your other money can grow.
Now that I have hopefully made that crystal clear:
Saving cash will not provide for your retirement.
Let’s do some math. The average annual household income in America is right around $50,000.
If you were to put 15% of your income under the mattress from age 30-65, you would have $262,500 when you are ready to retire.
The cost of living (inflation) is going up at the rate of 3% per year, but we won’t complicate the scenario by adding that math to our equation.
How long do you think $262,500 will last you? If you live to age 85, that will give you $13,125 per year to live on.
Can you make your dream retirement happen with that?
You might have a check coming from Social Security, but rumor has it there won’t be any money there when we need it and giving the current spending habits of our government, I think the rumor might be true.
So what are we to do? To truly build wealth, you must use the power of compound interest by investing in the stock market.
If you listen to the news, they will tell you all of the negative reports from Wall Street.
Maybe it is time to listen to those who have succeeded.
Einstein referred to compound interest as the 8th wonder of the world.
How about Warren Buffett?
“Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
Over time the stock market has averaged 11.85% per year. There are always nay Sayers when it comes to the stock market, but we can argue that some other time.
For now, let’s go back to our math equation.
If you were to take that same 15% of the average annual income from age 30-65 and invested it in the market to gain 11.85% per year, your $262,500 would now be worth $3,860,842.52! Almost $4 million dollars!
How does your dream retirement look now?
It is up to you to decide.
Will you listen to the nightly news or a friend or family member who made bad choices and lost money? or will you take advice from those who now how to win?
Turn off the tv for a while tonight and pick up a good book. The Millionaire Next Door is an excellent read if you want to really know the “secrets of the rich”. (spoiler – they aren’t secrets)
I have nothing to gain from this, I just want you to succeed and have a better future. Change your family tree.
If you have any questions about this post, don’t hesitate to contact me for more information. I would love to show you how to invest.
I don’t sell products. I offer information and hope.
Doing nothing, will get you nowhere.
My name is Tim Parady and I am 36 years old. I was born in Connecticut, raised in Virginia, had a brief layover in Kansas which led me to Texas where I met my wife and best friend. We just celebrated 145years of marriage.
I have the best job in the world, which is to improve peoples lives. I teach people how to win in all areas of there money, which affects all areas of their lives.
78% of Americans live paycheck to paycheck, with no money in the bank and little knowledge of how to invest for their retirement. You can have a different future. You can win with money and I can show you how.
I am an independent Dave Ramsey Financial Coach,and Insurance Agent at Alkali Insurance and I am here to serve you. My goal is to provide knowledge and tools to change your life. To schedule an appointment to address your financial needs and goals, email me at firstname.lastname@example.org