Buying or Investing

Message/Experiment of the Week:

Once you’ve paid for your basic necessities do you buy things, or do you invest your extra money? One of the keys to becoming financially free is investing your extra money instead of buying things with it, and the younger you start the better.

Let’s say that you are 18, and you have saved $1,000 from working at McDonalds. If you invested that money in an amazing high-growth stock like Tesla, etc. with the potential to yield a 25%+ annual return, then your money could double roughly every three years (apply the Rule of 72, 72/25=2.88 years to double). If you did actually get a 25% annual return, then by the time you are 21 you would have $2,000, by the time you are 24 you would have $4,000, by the time you are 27 you would have $8,000, by the time you are 30 you would have $16,000, by the time you 33 you would have $32,000, by the time you 36 you would have $64,000, by the time you are 39 you would have $128,000, by the time you are 42 you would have $256,000, by the time you are 45 you would have $512,000, by the time you are 48 you would have $1,024,000, and by the time you are 51 you would have $2,048,000.00 all from that initial $1,000 investment at 18. If you continued to leave the money in, by the time you are 81 you would have over 2 billion dollars.

2 billion dollars is a pretty amazing upside, especially when you consider that the only downside is your initial investment of $1,000. The key is to get started early!

For an experiment this week, start investing your money instead of spending it. Not sure what to invest in? You can ask a financial advisor you trust. Just make sure you know how they are compensated and that they have a good track record (many don’t). Dave Ramsey recommends mutual funds that have a 10 to 20 year history of 12% returns (How to Choose the Right Mutual Funds - Ramsey (ramseysolutions.com)). Warren Buffett recommends investing in an S&P 500 Index Fund, which has averaged around 10.8% over the last 30 years (Warren Buffett Recommends This Magnificent Index Fund. It Could Turn $500 Per Month Into $986,900 | The Motley Fool). 

Video of the Week:

How a Janitor (Ronald Read) SECRETLY Made Millions

Song of the Week:

Masaka Kids Africana - I Look to You [Official Music Video]

Disclaimer: This is personal opinion and not meant to be financial advice. For financial advice please consult a financial professional.

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