[quote=scaredyclassic]I feel the biggest gains come from just not spending money and investing that. How much have I saved over 20 years by not having a cleaning person. It’s staggering! 100k? No dry cleaning shirts ever, iron myself, hmm, 30k? Eating just cabbage and oats for a month? Cheapest vodka? I think one can get almost rich just being ridiculously frugal.
I did just break down and hire a cleaning person recently because my poor wife can’t take it anymore. Man, the place looks clean…but is it better to have money in the account or dust on the shelves?[/quote]
$1000/month invested every month for 20 years with 4% average rate of return is roughly $368,997.
$1000/month invested every month for 20 years with 5% average rate of return is roughly $413,746.
$1000/month invested every month for 20 years with 6% average rate of return is roughly $465,351.
I mean, speculative trading is fun and like going to Vegas, but seriously building a financial nest for kid or spouse, I wouldn’t count on speculative trading for that purpose. One-shot one hit wonders rarely work for the majority of the people out there…
DRIP is exactly how I built my kid’s 529 college savings account and her UMTA custodian account. It doesn’t all have to be domestic stock. There’s international stock and bonds and fixed income too. And for that safety net, I split things into 4 baskets to spread the risk, domestic, international stock, bonds, and short term cash. When she was younger, larger percentage was allocated to domestic and international stocks, but as we are getting closer to college, that allocation went less stock and more bond-ish, short term cash, and when she start to use it, it will be mostly short term cash to factor out risk of a decline while the money is needed….She’ll have more money for good use than most adults in this country and it was effortless do to this.
If I put her on payroll for a small business, she would have earned income and could start contributing to a Roth IRA every year starting now….A Roth IRA from when she’s 16 to when she’s 56, making regular contributions…$6000/annual Roth IRA contributions 4% average return over 40 years= $622k
And my kid’s 529 plan is roughly 15 years old and the account value is pretty consistent with what the calculators said they would be.
It doesn’t take coming from a really uber rich family to setup your kid for success. It just takes small contributions (that you will barely notice) every month over a long period of time in a tax advantage account and let compounding work for you.
Besides my own 401k, I put most of wage income into after tax accounts, of varying risk. I barely have any debt now, and don’t spend a lot on myself personally, mainly my kid’s education and maybe her school, that’s it.
People are making this way more complicated than it is imho….
