What Would You Do With $250,000?

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.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

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