Over the last 112 years, the stock market has averaged an annualized return of 8.5%*. If you were to invest a single dollar into the market and receive the average returns, in 30 years it will be worth $11.56 (see “The Power of Compounding”)!
Let’s translate this into a figure that will scorch an image into your mind that will hopefully transform your perception of the importance of saving and power investing. Let’s talk in terms of something that keeps us away from doing what we want, when we want to. Yes, that’s right… work!
For every hour of salary that you save and invest into the stock market, you will cover the future costs of taking 11.56 hours off with pay! If you save 10% of your salary (only 4 hours each week) for only a year you will have saved 208 hours of salary. Those 208 hours of salary invested will extend to you the luxury of 2,404 hours (64 weeks!) that you won’t need to work in the future while still receiving a full salary! Continue this exercise for 10 years and you’ve shaved off more than a decade of your requirement to work before retirement. Yup, it’s that simple. Save a higher percentage and the results are even more impressive!
– Surely it can’t be that easy
– Surely Brent’s math has to be wrong
– Surely the stock market averages won’t repeat themselves
– Surely Brent’s made some assumptions or taken some liberties when calculating all of this
If you caught yourself saying any of these statements, you’re making excuses. Too many people look for reasons why things won’t work for them. It’s easier to convince oneself that an article is inaccurate rather than to make a change in one’s habits. Right now you now have a choice. You can make an excuse or you can make a change, what will it be? Your decision right now will determine if you end up retired more than a decade earlier or if you’ll be one of the individuals who is left saying “If only I would have”. What will you do?
* Click here to find out how to receive average returns with little/no stock market knowledge.
Founding Partner, Amplified Investments