June 16

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A Simple Way to Become a Multi-Millionaire

One of my dearest clients had a legitimate concern in reference to my professional “core beliefs.”

She inquired:

“Dave, you keep proving to us, over and over again, that someone who invested over 20 or 30-year periods during the past century was extremely successful; as long as they employed an investment strategy that utilized  a diversified portfolio of stocks and bonds.

 

BUT, my mom lived to age 109.  What happens if I end up being retired for FIFTY years?!  I don’t want to end up in the gutter at age 98.  Sure, it’s awesome that I get to spend more money earlier in my retirement but what happens if I live WAY longer than I ever thought?”

She’s right.  Maybe we should be looking at even longer time periods.  Yes, I want you to spend more money in your 60’s and 70’s when you will enjoy it the most, but at the same time, we don’t want you ending up in the poor house (where is the “poor house” anyway?).

Let’s go back to the data.   In each one of these scenarios the following retirees:

  1. Retired with $100,000.
  2. Put all of the cash into the stock market (the S & P 500 Index).
  3. Withdrew $5,000 a year for 50 years from their account (5% per year / $250,000 total).

______________________________________________________

Edna Grubbs was retired from 1930-1980.
At her death, her remaining account balance was $825,628.

________________________________________________________

Ruth Fike was retired from 1940-1990.
At her death, her remaining account balance was $16,613,121.

________________________________________________________

Connor Sheary was retired from 1950-2000
At his death, his remaining account balance was $25,890,003.

_________________________________________________________

Ida Gadd was retired from 1960-2010.
At her death, her remaining account balance was $4,517,441.

___________________________________________________________

Do these numbers almost seem nonsensical?  I mean, seriously.  Connor died with $25,890,003!!!!  What is happening here?!  I am just using raw, academic data.  None of this is my opinion; it is simply what would have happened.

Points to Consider:

  1. Compounding interest is a powerful force of nature.
  2. In these examples, I did not factor in the effect of taxes.
  3. These examples do not include investment fees.
  4. So what? Ruth still dies will well over $10,000,000 once all of this is calculated.  That is ONE HUNDRED TIMES more than she started with even though she spent $250,000 during her lifetime.

Be Blessed!

Dave

Call to set an appointment:  941-556-6307

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Indexes are unmanaged portfolios and individuals cannot invest directly in an index.  Actual results will vary.

This communication is for informational purposes only and nothing herein should be construed as a solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional legal, tax, or accounting counsel

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