Where do you start if you want to be successful with money?
This is the million dollar question...literally.
From all the research and all the education I have completed, where I think you need to start to be successful with money has nothing with stocks, bonds, IRA’s or 401k’s.
Where I think you need to start is with yourself.
What is this crazy statement you say?
Yes, I think you have to start with yourself. You have to decide that you are going to be successful with money and that no one is going to stop you.
You have to decide that you’re going to get the advice and information you need so that you make great decisions based on your individual situation.
At the end of the day, being successful with money doesn’t require you to be a rock star or professional athlete. If you study the majority of self-made millionaires in this country you will find that most of them built their wealth slowly.
They committed to living on less than they made every month. They saved and invested the difference for the long term. And they let the magic of compound interest do it’s thing.
Have you met your new best friend Mr. Compound Interest?
If you haven’t, let me introduce you.
Albert Einstein said “Compound interest is the 8th wonder of the world. He who understands it, earns it..he who doesn’t...pays it.”
Essentially it works like this.
Say you invest $100 into your retirement account and in the first year, your investment earns 10%. Now you have $110. Now the next year, you again earn 10%. How much do you have? $220? No! You actually have $231!
How? you ask?
Well, the second year, you not only earned 10% on your initial investment of $100, you earned extra interest on your previous investment AND the interest you earned before!
As you do this over time, you keep earning interest on your investment that you personally put in, but you also earn interest on top of the interest that you previously earned.
When you earn interest on interest, this is called Compound Interest.
Here’s an example for a 30-year-old with $0 in retirement savings that wants to retire at 65.
Age you want to retire
Desired annual income upon retirement
Annual contribution from other sources
Current amount of savings
Rate of return on savings
Amount of savings in:
Because of compound interest, if you invested $10,000 per year, and received an 8% return, you would end up with just over $1.8 million dollars.
What would happen if you just put that money in a bank account or under your mattress and earned 0% interest? You would only have $350,000.
This is why it’s important to invest early and often. Whether you can invest more or less than $10,000. Or, if you don’t have 35 years until retirement. That’s not the point.
The point is, investing as soon as you can and doing so continuously until you are no longer earning an income is vital to your financial success. It will not happen without planning and consistent discipline. But, you can do it.
I can help you open your first retirement account if you've never had one, or transfer over that old 401k from your last job to an account with investment options you control. If you want help with getting started or have any questions, I’m here to help. Schedule your appointment today. calendly.com/kisplanning
In as little as 24 hours, you can get started with moving forward with your financial future.
To your wealth..
Jason J. Hamilton