A Simple Guide to Getting Rich
18 August 2006Harry Domash has posted one over on MSN Money. It’s nothing new if you’re a veteran of personal finance blogs, but for anyone who’s a beginner, it’s a good read. It explains, in simple terms, the basics of personal finance – namely that:
Only three ingredients are needed: income, discipline and time. Chances are, you already have two of them, income and time. All you need to do is add the third, discipline. And armed with the following knowledge, that key third ingredient may be a lot easier to find.
Here’s how it works: Say you start with nothing, invest $500 (of your income) a month (a healthy discipline), and let your money ride (over time) in diversified investments. Long term, the stock market returns at least 10% annually. Assuming a 10% return, you’d have $102,000 after 10 years, $380,000 after 20 years, and $1.1 million in 30 years.
Most personal finance blogs seem to hammer away at these ideas, again and again. There’s a reason – there’s really not that much to becoming rich. Anyone can do it, even on a small income. Why don’t more people get rich, then? Well, they don’t understand the basics – or they don’t follow the simple rule of investing money every month over a long period of time. Which is why you’ll hear bloggers tell it to you again and again: Figure out a way to save that $500 a month, put it in an index fund, and you’ll retire happy and wealthy.
Discuss this on the Free the Drones Investing Forums here.
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