Number 1: The age you start saving
The younger you are the larger your crucial asset.
That asset is called time. And I bet you have more of it left than me. I certainly do have more Christmas days behind me than in front of me.
Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent.
One idea is to spend time in the market. Because it is your greatest natural advantage and makes all the difference in making money work for you (the generally preferred choice over “working for money”).
Number 2: Your savings rate
Once you decide on saving more it is crucial to not put that money into a vehicle that does not even give you a return above the mean inflation rate.
The stock market is an “affordable-and-ok-risk” vehicle as long as you invest in it for the long run. Not “risk-free”, mind you.
Most people fear risk, and work hard to avoid it. On the surface, it makes sense to avoid risk. The problem is that today, in a disrupted market, risk doesn’t work like that. Investing isn’t a coin with risk on one side and security on the other; it’s a two-headed coin with risk on both sides. Not taking a risk is risky. And if you take a risk, well, that’s risky too.
Number 3: The investing costs you pay
Sometimes small deeds make a huge difference. Like filling in a simple form or two to move your money to a low cost broker and invest it in a simple portfolio of index trackers (ETFs) where you would pay fees of less than 0.5% per year. Over 25 years, this would be a risk-free way of making an extra million bucks or so in today’s money.
And please don’t say to yourself now: “Yeah, good points. I really should get round to doing something about that…but I’m a bit busy right now.”
Do those 3 numbers sound familiar to you?
Any ideas from this post on what you could do next?
There’s a big difference between a) having read something and b) taking action to follow it through to its logical conclusion.
So fear not, an idea starts to be really interesting when you get scared of taking it to its logical conclusion.
“What’s right is what’s left if you do everything else wrong.” – Robin Williams
“Change is the law of life. And those who look only to the past or the present are certain to miss the future.” – John F. Kennedy
“There are two things to aim for in life. First to get what you want, and after that, to enjoy it.” – Logan Pearsall Smith