I’m starting a new post category called Brick’s Book Quotes. There’s a lot of good information out there but I know most people won’t read one book let alone the many of read on the topic of personal finance and investing. So I’ll save you the trouble of reading everything and share some of the things I’ve read over the years I think might help you.
Today’s entry is from the book Millionaire, by Wayne Wagner and Al Winnikoff. The authors point to 12 simple steps to millionairedom. The first of which is to Save. The second step is to Start Now. From the book,
“…accept that you can average a 10% return per year, which doubles your money every seven years… If you’re twenty-five and want a million dollars by age sixty-five, you need to put aside only $179 per month or $5.97 per day. [BUT] if you fool around until you’re fifty, you’re going to have to shell out a lot!”
At the same rate of return, a 50 year old would need to save $2,491 per month and a 40 year old would need to save $805 per month. That might seem like a lot per month for some. But it’s what it takes to make a million.
If you’re young and put retirement off for decades, you’re in pretty good shape. But if you’re getting a late start, all hope is not lost. First off, you can push your retirement date out a little. Or you can live on less. Although, in most urban areas, living on less than $1 million is actually pretty difficult given that amount of money produces about $40,000 per year in income safely. (I will explain this in another post.) You might also consider your personal living arrangements and lifestyle. As I pointed out in yesterday’s post, it’s easier to get wealthy when you’re cohabitating and sharing expenses and savings. If you’re splitting your rent, you’ll have more left over for investment.
The most important thing to remember here is to save, and get started now.