A few years ago, I attended a Buddhist discussion meeting. During most of our meetings, we share a personal experience of how Buddhism has helped us.
One of our members told a story of how he had won a lawsuit several years ago and was awarded $250,000.
Do you know what you would do with that much money?
Well, the first thing he did was quit his job and go on a vacation with his son. No harm in that – as long as you don’t spend $25,000 on the vacation!
The two years that followed were spent partying, traveling and living like a rock star…
…and then the funds dried up.
Granted, $250,000 is a nice piece of change. But it’s a far cry from $250 million.
The sad truth is that his spending was not at all unusual. According to statistics, 95% of lottery winners are bankrupt within five years of winning the lottery. I would think that the data on winners of lawsuits is very close.
When I asked him if investing in stocks ever crossed his mind, he said no, because he didn’t know anything about stocks.
I thought to myself, what a shame…because that mint is totally gone.
My next question to him was, “When did you receive your settlement?”
“2005,” he answered.
That really made me sick. Because all I could do was calculate how much he would have had he invested a third of it in, let’s say, Amazon (NASDAQ: AMZN)…
So…let’s play my favorite game, “what if?”.
If you win $250,000 in a lawsuit, you will probably receive $150,000 before taxes, and net about $90,000. If he took 1/3 of that and bought Amazon stock in 2005, that $27,000 investment would be worth a little more than a million dollars today.
Ignorance is not just bliss – it’s very, very expensive.
The stock market can be a really scary place for people who don’t know better. But it’s hands down the best game in town if you want to build long term wealth.
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