Investing Won’t Make You Rich (Most likely)

When I first heard about investing, I thought it was a guaranteed way to become rich very quickly.

1. Compound interest
– A very simple example is
– If I gave you 1 penny today and doubled it for 30 days
– In one month you would have around 5.3 Million dollars
– If you try this at home, by 18 you would start to run out of money most likely and that’s how cool compound interest is

In real life:
– It’s the idea that when you invest $100 and you get back 10% return every year for 10 years
– It means that the first year you get $10 In profit and the second you $11 in profit
– Because you keep making that 10% on the money you invested plus the money you made also.

So that’s why:
– Investing works best for people that constantly invest and also let their money grow
– That’s why people that constantly keep trading

2. Real Wealth is
– When I tell people about investing
– And that they won’t be able to buy a new Lambo and a 40 room house
– They ask me then what’s the point of investing if you won’t be rich
– Well the idea, is that most likely your idea of being wealthy is wrong.

Here is Why:
– The way I see it, being rich is having money come in than you have going out
– You can be working for minimum wage, but if you make 30k a year and only spend 20k then you are rich
– But If you make 1.7M a year and spend 2M then you’re poor
– The job of investing is basically to replace your income, and as long as your not spending more than you make then you are wealthy

But there is something else:
– If you do want that Lambo or that house
– You can get it, but you have to understand that it will take a lot of investing, a lot of work, and also time, to get your investing to make you that much money
– So if you’re willing to do it, then by all means.

3. You have to run the Numbers
– Say for example your goal is to have your investment replace your income
– How much money would you have to invest over a period of time to be able to replace your income
– Well the math is simple

Math:
– Say your salary is X ( 60k ) and your dividend( the money your investment pay you) is X ( 2.8%) or maybe you want to follow the 4% withdrawal rule
– All you have to do is divide your salary by the dividend you’ll get
– Or for example the 4% rule ( which basically means if you get 8% returns every year and take out only 4%, then you won’t run out of money, but even if you do it’ll take 33 years)

So how long would I Have o invest to have that much money at an 8% return:
– Well for this you’ll need an online calculator
– Use a savings goal calculator online
– I would need to invest 2,158 bucks to get to my goal in 25 years
– 10 years would be $10,900 a month and so on and so on.

Link: https://www.investor.gov/financial-tools-calculators/calculators/savings-goal-calculator

4. You need a strategy and to automate the strategy
– So whatever your number is
– If it’s 200 a month or 10k a month and you can actually afford it
– The answer is, make a plan automatic

The way I do:
– I use an app called acorns and invest in a moderately aggressive portfolio
– Of 80 stock ETFs and 20% bonds
– This is a low investment strategy that on average return around 8%, and that’s the key

Tip: if you’re playing the long game, you want some that’s not that risky, because you might get 20% with some random company but the -50% the next year.

5. Tips

– If you want to retire fast, you will need to make sacrifices today
– If you’re working minimum wage, you will need to change that
– Investing is all about patients, and I have a hard time with hat sometimes also

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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