Investing Secures Your Quality of Life – FOREVER

I read an article yesterday that contained some shocking statistics. Chief among them was this: 45 percent of baby boomers have no money saved for retirement.

Zero dollars.

Nada.

This is scary.

Look at Reddit’s personal finance subreddit on a given day and you are likely to find several posts from young adults about the financial trouble their parents are in as they approach retirement age. There are people in their 20s, 30s, and even younger taking out loans, applying for credit, and otherwise putting their own finances at risk in order to support their parents.

I happen to love investing. My personal goal in investing is financial freedom. I do not simply want to survive in my later years. I want to thrive.

And I’d like to accumulate wealth that I can pass down to my daughter, for her financial freedom.

Now, you may not care as much about amassing significant wealth. You may genuinely just want to be “comfortable”.

There’s absolutely nothing wrong with that.

But in order to always enjoy the quality of life you do now, you are going to have to have your own money.

You may be 45 and earning a good income now. You may have great health benefits through your employer. You may have a comfortable place to live, eat well, go on vacation once a year, and “want for nothing”.

Eventually, though, you will be 65.

If you don’t have enough money saved by then, you won’t be able to retire and live in the same way you are living now.

Many people say they will continue to work. But come on.

Human biology being what it is, it is highly unlikely that your 65-year-old body is going to be able to handle working the same amount of hours and handling all the same responsibilities as your 40-something body does now.

So you might work, but you’ll be making less than you do now.

Fast forward to age 75. Then 85. Americans are living longer than ever.

Eventually, you’re simply not going to be able to work anymore.

You’ll have Social Security, which is a pittance: the average benefit equals $14,000 per year.

You may be in the fortunate minority who retire with an employer pension.

But it still won’t be enough to maintain the comfortable quality of life that you are used to now.

Your healthcare costs, which may be negligible right now, will increase the older you get. And nope, Medicare doesn’t cover everything. Not by a long shot!

Bottom line: If you don’t want to struggle in your old age, you must save and invest now.

I wrote my book, The Stock Market is For Everyone, with a goal of encouraging as many regular, everyday, working people as possible to invest in the stock market.

That doesn’t mean you have to invest in hyper-growth stocks. like I do.

It doesn’t mean you have to pick your own stocks, like I do.

But if you want your senior years to be as comfortable, happy and enriching as your life is now…a safe place to live, good food on the table, quality healthcare, and enough money to do the things you enjoy…

…then you must save and invest.

Please take a look at my short guide today. It’s an inexpensive and easy read.

And it stands to impact the quality of your life…forever.

 

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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Guest Post: The Gap Used to Be a Penny Stock, by Chris Pascale

Good evening, Joes and Janes!  Tonight I’d like to once again turn the floor over to Chris Pascale, author, accountant, former CFO of Portfolios with Purpose, and current member of the IRS’ Office of the Chief Counsel.  Take it away, Chris! 

The Gap Used to Be a Penny Stock: More Proof That Eric Is Right

As I mentioned in a previous guest post, I’m working with my children so that they can learn about the stock market. My main goal is that they start saving young. If they become savvy investors, that would be an incredible bonus.

Recently, my 12-year-old asked me what the stock market is. Apparently, it’s mentioned on her news-feed. So, adapting the definition Eric gave us in his book The Stock Market Is for Everyone, I told her:

“Just as you can buy pieces of produce at the farmers market, you can buy pieces of businesses at the stock market.”

We were at Old Navy while having this discussion, so I looked up the stock to show her what it would cost to own a piece of the business. What I found was that Old Navy is owned by Gap, and that in 1980, you could have bought shares for as little as 5 cents!

1,000 Shares of The Gap for $50

Yes, if you were 18 or older you could have owned Gap shares for just 5 cents each. And that would have been expensive because they went as low as 3 cents that year!

Knowing this, let’s explore just how rich Baby Boomers could be if they had slowly bought shares from 1980 through 1985, spending only enough to buy 1,000 shares a month. This math will only account for average-ish prices, noting the cost of 12,000 shares each year.

·         1980: 12,000 shares for $600
·         1981: 12,000 shares for $1,000
·         1982: 12,000 shares for $1,500
·         1983: 12,000 shares for $3,100
·         1984: 12,000 shares for $1,900
·         1985: 12,000 shares for $3,000

The Cost v. The Reward

Now, to be fair, I was born in 1982, so I have no idea what kind of income I could have made during this time. But we can all agree that every working person could have figured a way to come up with $50 once a year, if not once a month.

Had someone executed the above purchases, he would have spent $11,100 for 72,000 shares of Gap stock.

Today, that investment would be worth over $2,300,000. And for those who only could have bought 1,000 shares a year, they would have about $192,000 after only risking about $1,000.

Applying This to Today’s Market

Why not find good companies with products and services you use all the time, and slowly acquire shares?

For example, do you use Facebook (FB) every day? Well, if you would have gotten in at the IPO, you’d have more than a 500% gain (just 6 years later!). And if you bought more shares after it slumped to its low in August, 2012, that money would have grown by 1,000%.

Am I saying that Facebook stock will keep going up? No. But history indicates that companies like Facebook have.

It’s the reason why every dollar invested into Johnson & Johnson (JNJ) in 1979 has grown by about 90-100x. The same can be said for Pepsi (PEP). Had you bought Microsoft (MSFT) shares in 1986, they would have only cost you 10 cents each, meaning that $1,000 invested 32 years ago would be worth $900,000 today.

We all want to get rich fast, but could you settle for getting rich within your own lifetime? Because you can.

RECAP

$1 of Gap stock from 1980 is now worth over $300,
$1 of Facebook stock from August, 2012 is worth $10,
and
$1 of Johnson & Johnson and Pepsi stock from 1979 is worth about $95.

Eric here.  Thanks, Chris, for this powerful illustration of what your wealth could be if you had invested years ago!  Please, folks, don’t wait another day – get in the market NOW!

 

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.)