Take a look at the stock market for the last 100 or so years. Notice how consistently we have 15ish years with no growth, then 15ish years with tons of growth:
And when the stock market grows, it doesn't mess around. Last two times (1949-1965 and 1982-2000) it went up about 10 times. Yes, 10 times. So had you put in $10,000 it would have grown to $100,000. $100,000 would have grown to $1,000,000 etc.
We're just now coming out of 15 years of no growth and will likely be heading into really good growth for the next 15 years. Wanna retire wealthy? Wanna spend more time with your family and less time worrying about money? Wanna buy a palace filled with cheap original eBay art and handicapped lamas? Whatever your financial goals, it's an amazing time to start investing.
List of complaints I could imagine hearing from you right now:
"I don't have enough money to invest!" - Read Dave Ramsey's "Total Money Makeover" as you likely have more than you think you do. Reading this book is also the answer for "I don't have any motivation."
"How do you even start? It seems complicated." - First make sure you're taking advantage of any employer match 401k programs (be sure it's invested in good growth stock mutual funds). Already done or aren't offered one? Go to Fidelity.com and click "open an account." Wire in money from your bank account (or set up automatic withdrawals), and invest away. Super easy. Starting is the hardest, most important step.
"What should I invest in." - Whatever you feel comfortable with (I think diversified index funds are best). My suggestions? Chose "SPY" (largest 500 companies in the US - it's what the graph is of above) "IJT" (600 of the smaller US growth companies) or "EEM" (index funds from emerging markets around the world) or any combination of the three. I use "IJT" and "EEM" as they tend to follow "SPY" fairly close, but just do a bunch better (instead of 10 times higher, they often do 20 times higher). Doing a third in each is great for most people.
"I have way too much money, and I don't want any more" - please call me.
Also, in case you're a Debbie-downer and doubt the consistency of mutual funds, this goes back to 1789:
As my Grandma used to say, "You want money to work for you, not against you." This is an amazing way to do that. And, for the record, Grandma started incredibly poor and died a multimillionaire.
(just because this is a family blog)
David has been telling me to do each of these things for YEARS. (Read the book, invest SOMETHING.) I've always meant to. There is something about two witness though, I've now got Dave Ramsey's book from the library, and will invest soon.
ReplyDeleteOr maybe it is simply that I needed a photo of cute kids WITH the info to get my bum in gear.
LOL, whatever the reason, I'm just happy to have helped motivate a fav cousin.
ReplyDeleteAlso, David is a nerd too? I had no idea. He must by my alter-ego in your family. That pleases me.