Wealth building two is a continuation of building wealth. The concepts of work ethic,
saving money and net worth will also be continued.
Wealth building two continues the concepts in Wealth Building. For example, no one is born knowing how to spend wisely and save regularly. The blank slate that we are born with must be cultivated and nurtured if we are to develop into financially responsible adults.
Parents would like to have children who work hard in school, make good choices and learn to manage their money. They would like their children to have bright futures full of promise. Parents, however, must take the effort to teach these principles to their children.
These things do not magically happen. It is a process that takes years, even if it is started at an early age. More often than not, the financial lessons that children learn from their parents should help them to have a bright future. At least, that's the way it was for me.
People often want all of the expensive, non-essential things that so many Americans seem to have-to-have. By delaying gratification and living below their means, many immigrants have been building wealth.
I was so fortunate that my parents persuaded me to value the importance of saving for something that I wanted. After the saving came the buying. There were times when I no longer wanted the item I had been saving for.
I've noticed that there are people who stand in line or even
campout in the cold, dark night so that they can one of the first to see a
movie or buy the latest iPhone. They have not learned to delay gratification.
And therein lies the key to becoming a millionaire in the United States. Do not be influenced by advertisements and delay gratification. If one starts early enough, saves and invests wisely, they will easily have a net worth of $1 million by age 65.
There are three ingredients that must be followed to accomplish this:
While a student in high school, I came across an article on compound interest. I was also told that investments in the stock market historically returned about 8 percent annually. With pencil and paper in hand I started calculating the value of $1,000 in one year (8% interest) to be $1,080.
After two years it would be $1,166 and so on. Somehow I came up with a future value of about $12,000 by the time I would be 50 years old. I now know that interest is paid daily or monthly - but I did not know that at the time.
I was more than impressed! I concluded that I could work for money. Save it. And the money could work for me. I wondered why no one had that thought of that before (dah).
There is tremendous advantage to starting as early as possible. Start with your first paycheck and you will have great security and no financial worries in retirement. As your income increases, add to the amount sent to your savings. Make it an automatic withdrawal from your checking account to your investment account.
Remember, it is your money. You are dependent on no one else
to receive that money. If Social Security is insolvent, so be it. You won't be,
because you have been responsible with your retirement finances.
If the eligibility age to get Social Security is raised to 70 or more, you could still retire at 65. You are in control of your financial future. Using compounding interest, you can be a millionaire at retirement.
Albert Einstein said: "Compound interest is the eighth wonder of the world. He who understands it, earns it...he who doesn't...pays it."
A long time friend of mine, who is a hard worker and a shrewd investor, and I would routinely use the phrase "get rich slow". That reminded us that get rich quick schemes are typically unsuccessful. There are many ways to get rich fast, but the odds of success are dreadful.
That reminds me of another dear friend who was always chasing the "get rich quick" schemes. I suspect he lost most or all of his investment each time.
Over twenty years ago I wrote a book entitled "Life
Choices". In it I discussed "advice", noting that some people
are eager to give it. I recommended only accepting advice from someone who had
already achieve the goal that I was seeking. This is rarely the case with those
trying to get rich quickly.
Now that I am retired, it is clear that the choices I made during my teenage years and beyond are affecting my retirement years. Sometimes a person chooses not to make a choice. By not making a choice, they have actually made a choice.
I am not a financial advisor. Accordingly the information presented is for informational purposes only. It is not financial advice.
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FINANCIAL SECURITY IN RETIREMENT