SERIES: How To Win With Money – Part 3

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

3.  Invest enough to capture your full company match (or $100 – whichever is greater)

Compound interest is an amazing financial principle that can literally explode your finances to levels you never believed possible. As proof, let me provide you some examples:

  • $50 per month for 40 years at 8% annual growth will yield $174,550 (you only invested $24,000 of your own money)
  • $100 per month for 40 years at 12% annual growth will yield $1,176,477 (you only invested $48,000 of your own money)

While you may be sick of debt and really want to start attacking it before you begin investing for the future, please ensure that investing is #3 on your journey to financial freedom. Here’s why: CONSISTENCY and TIME are what matter most when it comes funding your big-time goals and dreams (which is #1 on our “How To Win With Money” plan). If you have debt, it can take months or maybe even years to eliminate it. If you choose not to begin investing, you lose both “consistency” and “time,” the two biggest enablers for wealth!

Suppose you choose not to invest your $100 per month and focus on killing debt instead. Let’s assume that it will take three years for you to eliminate your non-house debt. Let’s see how much this will cost you:

  • $100 per month for 40 years at 12% annual growth is $1,176,477
  • $100 per month for 37 years at 12 annual growth is $819,259

Delaying your $100 per month investment for just three years will cost you $357,218 (the difference between $1,176,477 and $819,259! And if your company matches your investment dollar-for-dollar, double that amount to $714,438!

Non-investor: If that doesn’t make you RUN to begin your investments right now, I don’t know what will!

Where do you get started with your investments?

  • Start with company retirement plan (especially if there is a matching contribution from your employer)
  • Open a Roth-IRA (or similar tax-advantaged investment account)
  • Start or buy a business
  • Real estate
  • Personal talent or skill set that can create income

Read the entire series (available after 4/20/2013)

1 Comment

  1. Ben on April 23, 2013 at 8:46 am

    Hi Joe,

    Congratulations on your home payoff, but why are you using 12% as an example? Average annualized return for the stock market overall since 1972 is about 5.5% when accounting for inflation (perhaps close to 12% without accounting for inflation), but average investor performance lags far behind the stock market. They often see half or less of those gains.

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