Welcome to another series here on the wildly popular I Was Broke. Now I’m Not. website. We’re passionate about helping YOU win with your money. In this series, we are going to be talking about a practical, step-by-step plan that you can use to take your finances to the stratosphere!
How To Win With Money
8. Place at least 30% of your gross income into tax-advantaged investments.
Now that you’ve eliminated all of your debt – including your house and business debt, you have nearly reached the top of the ladder of winning with your money. At this level, you are now positioning yourself to prosper like few others choose to do. You have become an elite manager of money. Everyone can do this, but not too many are willing to make the few (but tough) decisions necessary to do so! In general, it takes between seven and ten years to move from Level 1 to Level 8.
Invest money into tax-advantaged holdings. It is important to pursue diversification to protect the investments to protect against a massive loss. Many people have achieved Level 8, but became so enamored with a particular investment (such as Enron) that they disregarded the importance of diversification and fell from Level 8 back to Level 1! After all, this is not about greed and hoarding. It is all about funding goals – your plans, hopes, and dreams.
Consider a 40 year old couple earning a combined income of $50,000 per year who has arrived at Level 8. They are now able to invest at least $15,000 per year. Suppose they already had $60,000 saved up because of their efforts in Levels 3 and 6. If they invest $15,000 per year from age 40 to age 66 and gain 12% annual growth, they will have $4,000,156 at retirement. That is with zero pay raises for 26 straight years.
Level 8 positions you for the final level on the “How To Win With Money” Ladder. It’s the best one of all.
Read the entire series (available after 4/20/2013)