Today, The Three Truths to Successful Long Term investing Part 2
What’s the most important ingredient that makes investing profitable? Hi! I’m Zina Spezakis and welcome to Tonka Beans. I think we saw Einstein who said, that the most powerful force in the universe is the power of compounding. Well, that couldn’t be more true than in the world of finance, look you want to invest in order to create wealth right? If you could stand some of the ups and down in the stock market and believe me there are a lot of them. The rewards are plentiful, by investing in the stock market you will have a lot more money for things like retirement, education, recreation a pass thing that along to your kids if you want to.
You stop start renting and even buy that house. All I want to hear, “Oh it’s such a hassle” or “Oh, its takes away from my spending power.” The cost of none spending is a lot worst. Watch part one of this series if you don’t believe me, you just have to do it. Otherwise you will not be financially ready for any of your goals like sending your kids to college or earning your own home. Now, let’s talk about temptation, we all want something we don’t actually need. My confession, I have an awful lot of $200.00 pairs of shoes in my closets, it’s beautiful isn’t it? Yes, isn’t, yes it’s a sickness but before I spend another dime on another pair of shoes that I don’t need. Let’s think about that how that $200.00 could grow if I’m invested instead. A 10% a year which is rough fully the stock market is historical average returns since 1926. Over 20 years, my pair shoes will become $1,300.00 cash in my pocket, “Those shoes are pretty hot”. I know, but sound those $1,300.00. So, what is grows so much. It doesn’t take Einstein to figure it out, are you ready?
Say, you spend $5000.00 of your income each year and stuffs you really don’t need, instead of putting it into the stock market. Sounds like o lot? No, latte a day and some extra HBO channels and your half way there so, stick with me. Say that money return in average of 10% a year, after 30 years how much do you think that $5000.00 a year would be worth, are you ready? Could be worth $822,000.00 it’s your jaw on the floor yet? What would you do with that kind of money? You will be coopering around and a nice a car and you’re old egg that’s what. Maybe you can only in four to invest $5.00a day, but not that much. To the math that’s $18,000.00 a year. Brown bags your lunch, skip that glass of wine with the girls and just invest it. It’s not a lot but if you earn your early 20’s you’ve got the best ally on your side, that’s time.
If you invest $18,000.00 once a year, will the 10% return when you retire in let say 46 years it will grow to more than $1.4 million that’s my friends is compound interest. When your investments begin to earn money and those extra returns start to earn money and so on and so on, your investments can quickly build up. Extend that time period, or raise the amount your investing and your results increase dramatically. That the power of compounding is a single most important reason for you to start investing early, everyday you’re invested in the day that your money is working for you. Helping you ensure you have a financially secure and stable future.
Now, one word of warning, there is no guaranteed that the market will go up the first day, the first month or even the first year of that your investment. The history I shown that eventually it will and I can’t guarantee doing nothing at all will not provide you with the comfortable retirement. Even starting late, is better than doing nothing at all. And there is one more truth to successful investing, watch part 3 of this series on tonkabeans.com to find out what it is. And for m ore information, please visit us at tonkabeans.com, we also want to hear from you so please join our community and become one of our opinion makers. Until then, thanks for watching this is been Tonka Beans and I am Zina Spezakis.
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