10 things millionaires won't tell you.

[gloryaccordy]

Straight Success, the grammatical errors in your sig irk me.

I agree to a degree with Scott's post. However, I do think we have definitely entered the end (a possibly temporary one) of an era of prosperity though. I mean look at how much govt intervention there is in the market... they're gonna mess it up. They bought up ALL the mortgages, and there's evidence that they're the primary buyers of equities now as well. And of course there's the issue of quantitative easing.

[19dabeast85]

Myself personally, I am not at all interested in "safe" investments. If it's not returning 10%+ per year I consider it an inferior investment, at least for my personal reasons. Everyone has different reasons for investing, some for security and just to keep up with inflation, some for high yield, some for any reason in between. I lean more towards high yield which mean there is more risk, however, with very careful, precise research this high risk can be significantly reduced making high yield investments even more valuable to me.

My reasoning behind BIG-bank bonds is that the federal government absolutely cannot afford to let the big banks go bankrupt. If the huge American banks turn upside down then that really means the whole country and government has turned upside down and there'll be much larger problems to worry about when that happens. You can get good returns from big bank bonds that are also secured up to $250,000. Another great thing about bonds is even if the company does go bankrupt, the bond holders are close to the top of the list of people who get paid first while common stockholders get paid very last and usually lose all of their value. My main point is that big bank bonds are indirectly backed by the federal government and essentially just as safe as government bonds while returning a much higher rate.

I agree that today's young are financially illiterate, but the even bigger problem is that their parents are also financially illiterate(the source), the schools don't teach it and so they never had any opportunity to learn more than the few who have the personal desire to educate themselves. Everyone has been trained that you should have whatever you want, you should have it now, and it's ok to 100% finance your wants and pay it off over the next 30 years. Too much of our economy is built up in credit and has no actual asset backing it.

One final note is that anyone thinking of entering the market this year, BE EXTREMELY CAREFUL, I and many professional investors I personally know believe this year will be very unpredictable and has a chance for a greater downturn than 2008.

[19dabeast85]

You also have to factor in other things... Money isn't all that makes one "rich".
I could have all the money in the world, but if I had no time to enjoy it, no friends to enjoy it with, no family in my huge home... no passions in my life other than making that number get larger... then it's pretty meaningless.

When I was working 3 days a week, making half of what I'm making now, I was actually happier. I was "richer".

I know that's taking it in a totally different direction than the actual intent of this thread, though...

Absolutely, "rich" is very subjective and is different for every person. I personally prefer the term "financial freedom" which is the point in which my cashflow coming in is greater than what is required to maintain my desired style of living.

[owequitit]

You also have to factor in other things... Money isn't all that makes one "rich".
I could have all the money in the world, but if I had no time to enjoy it, no friends to enjoy it with, no family in my huge home... no passions in my life other than making that number get larger... then it's pretty meaningless.

When I was working 3 days a week, making half of what I'm making now, I was actually happier. I was "richer".

I know that's taking it in a totally different direction than the actual intent of this thread, though...

Yes, but let's also be realisitic in that there is a certain degree of happiness in knowing that next month't mortgage payment isn't an issue, nor is the car payment etc.

I do agree that you should not live to work, but at the same time, it is nice to remove the financial stresses too. Of course, even as the article mentions, being a millionaire doesn't necessarily accomplish that anymore either.

Also, notice that most of these millionaires came distinctly from middle class backgrounds and that their primary over-riding concern is to maintain the lifestyle that allows them to have some financial independence, and not the overwhelming desire to grow that money further.

Plus, if you do things for yourself, then you can in fact have BOTH desires in a comfortable homeostasis.

Becoming a millionaire isn't all that hard. I know I could probably do it, as long as I remained focused. Or, rather, GOT focused... because I can't stay focused long enough to string together a coherent sentence, let alone plan and execute a long-term financial plan.

But Mike, here is where you are faltering. You could easily find a good investment person that would set up the plan for you. Yes, they will charge a fee, but of course, you end up a lot better off too, so it isn't a big deal.

You can even setup a system where there is absolutely no involvement required on your part. Your monthly portfolio contribution comes right out of the paycheck/bank account, and goes directly toward your plan. There are also numerous other financial benefits to such a strategy such as potentially lower tax liabilities etc, which simply increases the amount of financial gain you have.

It is all about being smart.

And of course, the reality of capitalism, despite the best efforts of some ideological propaganda machines, is that when you benefit financially by making your money grow for you, everyone else benefits as well, and thus the net effect on the economy is greater than it would seem. Not to mention the fact that because of that phenomenon, it leads to a healthier economy, which leads to more growth etc. It isn't by pure luck and magic that our economy has far eclipsed all of the other economies, and it is not magic that as China and certain other countries convert from command economies into free economies that their growth and success is starting to mirror ours.

One of the things I find most frustrating in talking to people about it is how accessible good financial tools are these days, and yet people just don't want to take the time to spend the couple of hours setting up their own financial independence.

[deevergote]

That is very true.

Of course, merely hiring an investment broker and telling him to take a few bucks out of my account every month and stick it somewhere that it will HOPEFULLY grow isn't going to make me a millionaire. It may contribute (as my post about multiple streams of income mentioned) but it won't happen that way.

To become a millionaire in the next few years, without the windfall of unexpected success (such as inventing the next big thing...), would take a dilligent effort.







And yes, there is most certainly a sense of happiness in knowing that the next mortgage payment is taken care of. I pay extra every month at the moment, trying to pay my already small mortgage down even further. That makes me VERY happy that I can do that!
However, when I was working 3 days a week, I was still making enough to cover the bills. I wasn't paying extra on anything, but I wasn't paying anything late. I was still able to go out and enjoy myself on my days off (which probably resulted in even MORE money being spent than I do now, when I have less time for relaxation).

Maintaining that level would be nice. I'd love to work my arse off and pay off my house... then go back to working less. Making enough to live comfortably, and using my days for more enjoyable efforts. Of course, going to grad school is the plan there, so it's not like I'm looking for 4 days a week to play video games and choke the chicken.

[gloryaccordy]

Yes, but let's also be realisitic in that there is a certain degree of happiness in knowing that next month't mortgage payment isn't an issue, nor is the car payment etc.

I do agree that you should not live to work, but at the same time, it is nice to remove the financial stresses too. Of course, even as the article mentions, being a millionaire doesn't necessarily accomplish that anymore either.

Also, notice that most of these millionaires came distinctly from middle class backgrounds and that their primary over-riding concern is to maintain the lifestyle that allows them to have some financial independence, and not the overwhelming desire to grow that money further.

Plus, if you do things for yourself, then you can in fact have BOTH desires in a comfortable homeostasis.



But Mike, here is where you are faltering. You could easily find a good investment person that would set up the plan for you. Yes, they will charge a fee, but of course, you end up a lot better off too, so it isn't a big deal.

You can even setup a system where there is absolutely no involvement required on your part. Your monthly portfolio contribution comes right out of the paycheck/bank account, and goes directly toward your plan. There are also numerous other financial benefits to such a strategy such as potentially lower tax liabilities etc, which simply increases the amount of financial gain you have.

It is all about being smart.

And of course, the reality of capitalism, despite the best efforts of some ideological propaganda machines, is that when you benefit financially by making your money grow for you, everyone else benefits as well, and thus the net effect on the economy is greater than it would seem. Not to mention the fact that because of that phenomenon, it leads to a healthier economy, which leads to more growth etc. It isn't by pure luck and magic that our economy has far eclipsed all of the other economies, and it is not magic that as China and certain other countries convert from command economies into free economies that their growth and success is starting to mirror ours.

One of the things I find most frustrating in talking to people about it is how accessible good financial tools are these days, and yet people just don't want to take the time to spend the couple of hours setting up their own financial independence.

There is still risk even with funds that are managed. Look up the story off Long Term Capital Management for an example.

[19dabeast85]

That is very true.

Of course, merely hiring an investment broker and telling him to take a few bucks out of my account every month and stick it somewhere that it will HOPEFULLY grow isn't going to make me a millionaire. It may contribute (as my post about multiple streams of income mentioned) but it won't happen that way.
n MORE money being spent than I do now, when I have less time for relaxation).

Please don't confuse an investment broker for a financial advocate/adviser who charges fee-based rates. An investment broker doesn't care about you, they only want to make themselves as much money as possible while risking YOUR money. A quality financial advocate on the other hand gets paid a percentage of the value he creates for you and thus both your goal and his goal are the same...to maximize YOUR assets.

[deevergote]

True. I merely chose a description to make the point.

Either way, handing over control of a small monthly investment to a guy that knows more than you do, regardless of his intentions, isn't going to make you a millionaire. Not unless you're already quite wealthy, and can afford a substantial investment each month.

If I invest $1000 per month (which is a lot, even at the level I'm at now), and I somehow manage to get a 7% return on that investment... That is still going to take quite a few years to reach 1 million.

A good, secure investment strategy like that is an ideal portion of an overall plan for wealth... but it shouldn't be considered the sole source.

[owequitit]

Straight Success, the grammatical errors in your sig irk me.

I agree to a degree with Scott's post. However, I do think we have definitely entered the end (a possibly temporary one) of an era of prosperity though. I mean look at how much govt intervention there is in the market... they're gonna mess it up. They bought up ALL the mortgages, and there's evidence that they're the primary buyers of equities now as well. And of course there's the issue of quantitative easing.

They will figure it out, and they will pull out of the markets, as they should. There is already a lot of feedback starting to come out about how the market interference is going to be bad.

But, from the political perspective, it is a little more complicated. For starters you have the fact that these people campaign for office on the premise that they appear to be doing good things for people, or at least trying, whether that is the actual reality or not. So, they can't sit around idly by while the market disintegrates.

Further, while there WILL be some definite downsides to their intervention, the fact remains that had the banking system been allowed to systematically collapse, our economy would be so much worse than it currently is, that you would not even want to begin to imagine that landscape.

Also, I don't agree about economic growth. It is the end of the era, but first we must understand what fueled the era.

The "era" of growth that we have grown accustomed to was pretty much solely the result of the computer. It allowed new productivity gains that would heretofore been absolutely unimaginable. As it integrated its way through our system, it allowed new ways of doing things and new efficiencies that were simply impossible before. But, it was pretty much common sense that as it became widespread through the system, the law of diminishing returns would set in, and the productivity gains would taper off, and thus the economic benefits would taper off. As such, we watched the growth induced by automation begin to taper off.

What we are looking at in the future is a period of more reasonable sustained growth, as opposed to the meteoric growth we experienced through the 80's and 90's.

This has ALL happened before. I remind you that prior to the industrial revolution, the economy was fairly stable and growth was much slower. We also were very much in this position of being over-leveraged in the 1920's when the market crashed back then. Many similarities. Too much credit, poor investment decisions, unfounded market speculation, and unprotected investment markets that would have the potential to completely destroy our economy. There was NO market and bank regulation back then, just as there isn't any on the derivatives markets that almost brought us down this time. But there will be.

We were fueled through the 50's and 60's by technological innovation, which we have lost, because Americans have become comfortable with the expectation that their lifestyle is some how deserved and entitled. We will learn soon enough. The best results of the cold war were the fact that we KNEW we had to innovate more and faster than Russia. Now there is no cold war, and thus no systemic motivator to innovate better. But China may drive a change in that attitude as much as this collapse may remind people that we aren't entitled to anything.

As the industrial revolution waned, and the cold war waned, we again found ourselves in horrible economic straights. Stagflation was a really bad thing. It took a huge systemic shock to straighten out, and was very unpopular. But it worked.

Of course, that was just as the technological revolution started, so we went from industrial, to technological, which fueled the growth for another 20-25 years. There is no way to predict if there is another revolution around the corner or not. But if not, it is still likely that our economy will return to a state of mild and sustainable growth.

However, I can say that purely from an economic standpoint, if our national leadership actually pulls their head out of their asses and pursues a logical and legitimate agenda of overhauling our national infrastructure (roads, power, and port facilities) all of which could greatly counter price increases in critical sectors of the economy, as well as producing a sustainable and logical plan for new energy sources, then that would in and of itself leverage much more growth. The reason is that every revolution that has fueled great economic growth has been about gains in efficiency and productivity.

Currently, our administration is not doing that. They have foregone a plan to promote a hyrdogen ecomomy in favor of shorter term "stop gap" measures. Of course, on the other hand, hydrogen makes ZERO sense if we are producing it by burning fuel. So, Obama was correct in his assertion that we need new, clean, and sustainable power if we are to succeed. Nuclear is the best of those technologies. It is cost effective relative to the output, it is clean, safe, and sustainable. It also has the lowest overall impact on the environment. Nuclear would allow us to produce vast quantities of hydrogen without environmental damage in the form of burning fossil fuels.

Why is hydrogen so important? Batteries are nasty and expensive, and ultimately are made of finite precious metals. Charging them by plugging them in makes no sense because our system is powered by fossil fuels, so in essence you are merely displacing the source of the problem from the pump to the powerplant.

Fossil fuels are finite, so volatility is always a concern, especially as China and India industrialize.

However, if we can produce hydrogen efficiently, all of those concerns go away. Our lifestyle doesn't require adaptation, we gain efficiency, and we remove volatility, all while achieving the simultaneous reduction in environmental impact. In a sense, it does what the industrial and technological revolutions did. It allows us to have our cake and eat it too. Not to mention the political gains of not having to depend on hostile regimes to supply our need, as well as having to give them money. So we simultaneously take the wind out of the sails of the largest security threat as well. There will be ramifications of that, but ultimately, they will have to adapt and progress to find new ways to either maintain tyranny, or to remove it. Either way, they will have less leverage with which to cause problems.

Imagine filling your vehicle for the equivalent of $1.00 a gallon again...and not worrying as much about when the next terrorist attack is coming. Sound enticing?

Of course, the inevitable side effect of all of this is that we will undoubtedly discover many new technologies, one of which might make programs such as space flight reasonable again. Fusion power anyone?

So, in short, the point is that there are never a shortage of ways to improve quality of life AND see individual benefit at the same time. The problem isn't whether the avenue exists, it is a matter of whether we can quit pointing fingers about who is to blame for what problem and instead collectively decide as a group to move in a new direction.

Right now, the best thing that could happen to this country economically is for both houses of Congress to get cleaned out in November, and frankly, it is looking like a fairly distinct possibility. We need to send our "leaders" a message that we are tired of the bullshit from both sides, and we are no longer willing to sit by and watch them squabble over bread crumbs while increasing their own pay and benefits, while we have honest people losing their jobs and their lives. It is time to end the bipartisan ideological bullshit and put people to work who want to work.

This change in and of itself would put us on the best path to economic recovery. It will suck, and it will be hard, because EVERYBODY will either have to give up benefits or increase taxes, or some combination of the two, but if we get the deficit and debt under control, start to spend tax money where and how it makes sense, and get our fatcat political fingers out of the markets where they don't belong, we will have the potential to see long term sustainable growth.

The sole intent of a central government from the perspective of the forefathers was to foster an environment where the private sector could prosper and grow. And yes, "private sector" very much includes the individual citizen. Nothing more, nothing less. This is a fundamental economic tenet of this country that we have forgotten. Not to mention that it just makes more sense.

[owequitit]

There is still risk even with funds that are managed. Look up the story off Long Term Capital Management for an example.

Glory, Glory, Glory.

I knew about LTCM over 10 years ago.

You are right there is always risk in investing. But you know what? It is still much better odds. You know why?

There is no risk in NOT investing, because you have a 100% chance of losing.

[owequitit]

That is very true.

Of course, merely hiring an investment broker and telling him to take a few bucks out of my account every month and stick it somewhere that it will HOPEFULLY grow isn't going to make me a millionaire. It may contribute (as my post about multiple streams of income mentioned) but it won't happen that way.

To become a millionaire in the next few years, without the windfall of unexpected success (such as inventing the next big thing...), would take a dilligent effort.







And yes, there is most certainly a sense of happiness in knowing that the next mortgage payment is taken care of. I pay extra every month at the moment, trying to pay my already small mortgage down even further. That makes me VERY happy that I can do that!
However, when I was working 3 days a week, I was still making enough to cover the bills. I wasn't paying extra on anything, but I wasn't paying anything late. I was still able to go out and enjoy myself on my days off (which probably resulted in even MORE money being spent than I do now, when I have less time for relaxation).

Maintaining that level would be nice. I'd love to work my arse off and pay off my house... then go back to working less. Making enough to live comfortably, and using my days for more enjoyable efforts. Of course, going to grad school is the plan there, so it's not like I'm looking for 4 days a week to play video games and choke the chicken.

How much do you want to be I can disagree with you?

It doesn't take nearly as much investment and time as you think. Your are neglecting the benefits of compound growth, and I can prove it...

You are essentially trying to make excuses not to do it. Which is fine, but it isn't anywhere near impossible, it wouldn't require as much effort as you think, and frankly, it is whole lot better to start planning now, because in about 10 years you won't have much of an option anymore.

What in life worth doing or having is ever easy and simple?

[Straight Success]

Straight Success, the grammatical errors in your sig irk me.

Honestly, I didn't give a flying ****! However, I fixed it anyway. Happy.

On another note, anyone who has a level head, knows how to find the loop holes for extra income, and is financially responsible should be able to seek a liquid million by the time they are at least 45-50. I know I'll be there.

"... it's plenty of loop holes to eat yo, once they let you in, you 'sposed to keep dough, I can't give you the formula, but I'm on it though..."

"... such dummies, even if I fell I'd land on a bunch of money..."

[deevergote]

What in life worth doing or having is ever easy and simple?

That statement sums up everything that I just said!



I know saving and smart investing are very important, and practiced by all financially successful people (well, "celebrities" excluded... when you make 7 figures playing sports, music, or acting... you don't necessarily have to be smart... and many lose their riches for that reason)

I'm simply saying that setting aside a small amount each month isn't going to be the singular key to millionairedom. Yes... I made that word up.
At a $12,000 yearly investment (which is more than just about everyone on here can afford now, and for some, never), how long would it take to reach $1,000,000? With no interest yields, it would take 83.33 years of straight saving at that rate to hit a million.
With compounded interest yields, yes, it will accelerate... and considerably, I'd imagine... but how long would it take for JUST that $12,000 yearly investment to reach that level?

[4CYLPOWER92]

Honestly, I didn't give a flying ****! However, I fixed it anyway. Happy.

Just add an "s" after the word time and it'll be alright

[19dabeast85]

That statement sums up everything that I just said!



I know saving and smart investing are very important, and practiced by all financially successful people (well, "celebrities" excluded... when you make 7 figures playing sports, music, or acting... you don't necessarily have to be smart... and many lose their riches for that reason)

I'm simply saying that setting aside a small amount each month isn't going to be the singular key to millionairedom. Yes... I made that word up.
At a $12,000 yearly investment (which is more than just about everyone on here can afford now, and for some, never), how long would it take to reach $1,000,000? With no interest yields, it would take 83.33 years of straight saving at that rate to hit a million.
With compounded interest yields, yes, it will accelerate... and considerably, I'd imagine... but how long would it take for JUST that $12,000 yearly investment to reach that level?

At 6% annual rate, investing $1,000 per month, it'll take 29.94 years to have $1,000,000.