12.30.2006

The Holy 10 Percent - The Key to Success

As my good non-personal friend Dave Chilton talked about in his book, The Wealthy Barber, a major key to having a good nest egg (retirement fund) when you grow up is saving at least ten percent of what you own.

Let’s put it this way. You make 50,000 dollars a year, the taxes already been taken out. So that means you earn about 4,150 dollars a month. Ten percent of that is 415 dollars. If you save this little money for 30 years, or 360 months, you will have put in 149,400 dollars. But with an average of 8 percent compound interest, you should have over 150,000 dollars! Oops, did I say that? I meant over 1,500,000 dollars! People could live off that amount of money for their entire life.

But of course, this is just getting started. I mean, there’s no fun in being rich if you can’t splurge! 1,500,000 dollars probably would last me a month to a week. So if you would just bring it up by a mere 85 dollars a month (about 5 hours of work) for an extra 5 years, then you would end up with, in only 5 years, more than 1,100,000 dollars, leaving you with 2,660,000 dollars! Think about going for 40 years of saving. 3,910,000 dollars. an extra 1,250,000 dollars in another short 5 years.

From what I’ve heard, people who use this strategy of saving money at first think it’s a lot, omygosh my standard of living is in danger, uh oh no more treats, D’OH! But then 5 months later, you ask about it and they say, what extra 500 dollars? I like reading this section over because it has so many huge numbers.

2 comments:

micahelm said...

Wow!!!

Dakota said...

dude its me Dakota ur old friend how hav u been old buddy old pal well buy my msn is dkchase93@hotmail.com