It’s actually not that difficult.<\/p>\n
First of all, let me tell you that this post is about getting “automatically” rich<\/strong> in the long term<\/strong>.\u00a0 How about the short term<\/strong>?\u00a0 YES, getting rich in the short term\u00a0 or near future can be done quickly too, although not “automatically”.\u00a0 I will talk about that in another post (watch out for it, coming soon!).\u00a0 But on to this post, about getting rich “automatically” in the long term (like for retirement, etc.)…<\/p>\n Before you get angry at me for telling you to “earn more and save”, you’ll be surprised as to how “automatic” this earning and saving can be, and how automatic this saving can add up (and “compound”) into a million dollars<\/strong>. If you’ve watched any of my videos on future value, you already know the power of interest in making money grow. Furthermore, the effect of future value of money goes quicker when it is “compounded” (meaning your $100 earns 10% the first year and becomes $110 at the end of the year. In the 2nd year, you earn 10% on the new $110, so at the end of the 2nd year you’ll have 121, etc. and this interest just keeps growing bigger).<\/p>\n Here’s the kicker<\/strong>… this “compounding” grows tremendously when, instead of just earning or saving extra and investing it, you save\/earn at regular<\/span> intervals. Just to demonstrate: If you’re 30 years old and you earn\/save an extra $26\/day (or earn\/save an extra 9,500\/year) and invest it in a bond earning 5% a year, you’ll have an extra<\/span> $1 million<\/strong> by the time you “fully” retire at age 67 (nowadays, we work way past 60, and it may even be good for health and prolonging your life).\u00a0 If you start just 5 years earlier it’s even more amazing… your 1 million will jump by more than 300,000 to $1,348,000<\/strong> by the time you’re 67. Yes, there are other things to consider such as inflation; but the point is that becoming a millionaire can still be “automatic”.\u00a0\u00a0 If you’re willing to take more risk and, starting at 30 years old, start investing regularly in the stock market S&P 500 (instead of a bond) whose annual average return (1950-2009) is 7% already adjusted for inflation<\/span> and despite ALL the stock market crashes<\/span> (Source: simplestockinvesting.com<\/a>), then you could have your inflation-adjusted “automatic” 1 million dollars<\/strong> earlier, by the time you’re only 61. (What if you’re already kinda old?\u00a0 Is it too late?\u00a0 Nope… read below.)<\/p>\n *Note: I recommend consulting your personal CFA or CFP before making any investment decisions.<\/p>\n Of course, how do you save more and earn more?<\/p>\n Firstly, look at the non-productive expenses in your life.\u00a0 I like the way famed author Robert Kiyosaki<\/a> “redefines” the meaning of “asset vs. liability” in his book “Rich Dad, Poor Dad: What The Rich Teach Their Kids About Money – That The Poor And Middle Class Do Not!<\/a>“.\u00a0 In Kiyosaki’s definition (not your traditional accounting), if something puts money in your pocket now or in the future, then that thing is an asset.\u00a0 If it takes money from your pocket, it’s a liability.\u00a0 For example, traditional accountants (and biz students!) classify a new car as an “asset” because it has “value”.\u00a0 Kiyosaki classifies it as a “liability” because a) it loses it’s value by 20% (and reduces your wealth!) the moment it rolls out the showroom, and b) it takes money out of your pocket in the form of mortgage payments.\u00a0 Traditional accountants may classify educational school fees and tutorial fees as “expenses” because you “pay” for them. However, if this education helps us earn money, it could be reclassified as “assets” because they may cause people to save more and earn more in the future.\u00a0 If\u00a0 you’d like to read more about Kiyosaki, you can check out the Amazon reviews<\/a> by clicking here<\/a> or below.\u00a0 You’ll be shocked at some of his insights<\/a> which go against traditional education, and he even seems to\u00a0 imply that a lot of traditional education is bad; although he stresses the importance of financial education and financial literacy.\u00a0 (this blog post continues below)
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