This Is The Power Of Compound Interest (And How It Works)

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[@Vivienedouglass]

I have a 3 fund portfolio consisting of 33% S&P, 33% Total stock, and 33% international. I feel a need to focus on complete growth so I went 100% stocks, but does the SP500 and TSM overlap too much to make sense holding both? However I’ve been in the red for a month now. I work hard for my money, so investing is making me a nervous sad wreck. I don’t know if I should sell everything, sit and just wait but watching my portfolio dwindle away is such an eye -sore.

[@MickyGlover]

There are many other interesting stocks in many industries that you might follow. You don't have to act on every forecast, so I'll suggest that you work with a financial advisor who can help you choose the best times to purchase and sell the shares or ETFs you want to acquire.

[@AmithKaury]

I agree, that's the more reason I prefer my day to day investment decisions being guided by an advisor seeing that their entire skillset is built around going long and short at the same time both employing risk for its asymmetrical upside and laying off risk as a hedge against the inevitable downward turns, coupled with the exclusive information/analysis they have, it's near impossible to not out-perform, been using my advisor for over 2years+ and I've netted over 2.8million.

[@Jamesjerome0]

I actually subscribed for a few trading courses but it didn't help much, been getting suggestions to use a proper financial advisor, how did you go about touching base with your coach?

[@AmithKaury]

MICHELE KATHERINE SINGH is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.

[@Jamesjerome0]

My needs are kind of unique and complex. I'll contact her nonetheless, and I hope I'm able to make something out of it.

[@kevinquinn7645]

Save $25k in your retirement by age 25, at 10% compounded, and you'll have $1.5M at retirement. Now $1.5M in 40 years won't be worth as much as it is today, but its a good start.

[@cathyspiegel6765]

What I think everyone need is an adviser, who can help you get in and out of any investment at any time and you'd sure be in Profit. With this I feel anyone can basically achieve financial freedom.

[@rileycool_playz]

somewhat true but the remember the value of s&p will even go up bc inflation so your 401k could be valued even more just like the SS.

[@mocheen4837]

Each of my kids worked in high school and saved $10,000 in their Roth accounts by age 18.

[@moneymaker20246]

your not saving anything!!! stop fucking saying saving its investing

[@BrianaBudgets]

Cool well I’m 29 so it’s too late😂

[@nicholasmartinez6043]

I think George has really helped the DR brand with the younger generation. His way of explaining things with his own sense of humor and communication is good stuff

[@dcamnc1]

Not just the younger generation, I'm almost 50 and he's by far my favorite personality. He's neck and neck with Dave, for me.

[@15KHPCLUB]

You must have a terrible sense of humor then.

[@froniccruxis1049]

he just needs to drop his fanservice for apple. Just a huge money dump

[@Lourd-Bab]

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

[@Lourd-Bab]

@keanureeves316 However, if you do not have access to a professional like JUDITH ANN PEACE, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments

[@Lourd-Bab]

@keanureeves316 Judith Ann peace is her name

[@Lourd-Bab]

Lookup with her name on the webpage.

[@Lourd-Bab]

@keanureeves316 You are welcome .

[@Mountainhippiedude]

My last year of school, our teacher had a financial advisor come speak very briefly with us. He gave us this very same lesson. It is now 34 years later, and I am so grateful I was paying attention that day. I've now been able to set up custodial investment accounts for my 4 children (ages 8 to 17) and passed this very lesson on to them. It's not how much you save, but when you save it that matters the most. Cheers!

[@scoutandscooter]

Three things that schools do not teach well or even teach at all - sex, personal finance and death. This is such essential knowledge that may not be taught at home even by the best families.

[@robloxvids2233]

How do you set up a custodial account for your child?

[@Mountainhippiedude]

@@robloxvids2233 Any broker can help you with that. One thing to be aware of is that once you set such an account up, you can't take the money back. Those funds then legally belong to the child. You have control over it until they reach 18-21 (depending on the state), but that money belongs to them.

[@mocheen4837]

I started both of my kids saving in a Roth at age 16. I gave each of them $2,000 to start. By the end of high school they each saved $10,000. They each contribute every month. I hope they can keep this up until age 65.

[@zanakaysag3839]

Your teacher was wise

[@cb6429]

It’s nice that this topic gets refreshed often. I just started putting in 15% this year (I’m 23) and even though I don’t fallow Dave’s plan by the baby steps. I do enjoy listening to this show and it has saved me many times and taught me much more discipline and a better understanding in the financial aspects of life. This show is the reason why I haven’t financed a car! I understand that my 2003 camry takes me to work and to the clubs on the weekends just fine lol

[@alinatamashevich3354]

People who understand interest....earn it. Those who don't ...pay it.

[@DevHazy]

This

[@15KHPCLUB]

Wow, you can quote Albert Einstein! 😂

[@aaront936]

Sadly Alina doesn't understand compound interest. Or basic math for that matter.

[@stormblade1199]

​@@aaront936 She said nothing wrong... sounds like you just have a few debts to pay

[@alinatamashevich3354]

@@stormblade1199 All people in debt have a plan for a payment. Another broke joke

[@genxx2724]

Thank you for explaining, George. People who don’t read any books that explain this need to learn. Albert Einstein called compound interest “the eighth wonder of the world”. Invest now, people. As Warren Buffet said, you can’t buy more time with money.

[@aaront936]

Which is why you should prioritize investing over prepaying your mortgage loan.

[@themusic6808]

Compounding interest plus reinvested dividends over time end up creating wealth and has for generations. The key is consistency and patience as well as discipline. You can’t achieve it if you’re reacting emotionally to market downturns and pulling your investments because either you get frightened or think you need them. This is why time in the market always beats timing the market (which is nearly impossible)

[@jer1776]

Ive always been a saver since I started working as a teen. I wish I knew this stuff a decade ago, but better late than never.

[@Nessal83]

For those in their 20's that already started to invest in your future, you're wayyyy ahead of your peers. You are literally the 1%. Congrats.

[@josephdigi9373]

It's about time, Ramsey is using/making case studies (like the money guys) and graphics! Bravo! 👏 👏

[@andreamiller6200]

George speaks so much truth here. My dad taught me way early in life that if I made a dollar, I should save 10 cents. This habit started in childhood, and I followed it even when I was $140,000 in debt from student loans and was only making $15,000 as an intern. It meant that no matter how little was coming in, there was a certain portion that I needed to always save, and I considered that sacrosanct even when I was doing the baby steps. I likened being in debt to being in an elevator on the outside of a high rise building in a crowded city. For quite some time, all I could see were other buildings and never the sky, but what made that elevator continue to creep up ascending were the twin actions of saving my portion and lobbing everything I could at the debt, month by month by month by month. I did not even realize that I was indeed rising because for so long all I saw were bricks and shadows. But an amazing thing happened. Continuing to follow the principles, I ultimately started to see some rooftops and skyline. And continuing to continue, I crested the horizon and the elevator transformed into a hot air balloon and I continued to rise ever higher. It took me 12 years to clear my student loans, back in 2006, and I was continuing to invest a set amount at the same time. Now I have a paid off house and am an everyday millionaire and there was no struggle. Just the steady application of George's principles. And the most amazing thing about it to me is that even with debt but with a plan to retire it, I felt more and more free with each passing year. That is why today is the best time to start.

[@jimmymcgill6778]

How did you get into college with run on sentences?

[@andreamiller6200]

@@jimmymcgill6778 :-) They must have liked them! I went to McGill!

[@bobcostner2238]

BS

[@ilexevergreen5405]

*Dave's principles!

[@DannyBrooks1]

A lesson on Compound Interest should be required in every school!

[@samthegreatgenius]

Our junior high kids just covered this in math class. They couldn't fathom waiting that long to see results like this. You could see the gears turning in a few heads, but not many.

[@mbank3832]

That makes sense then everyone will invest and retire early and can’t keep suckers stuck in cubicles

[@brianmcg321]

I wish they wouldn’t say “compound interest” when talking about the S&P 500. It’s called “return” not interest.

[@fsufan]

wife and I started saving for retirement 30 years ago when we got married at 22 and 21 years old. had a million at age 47 and 46. now at 51 and 52 1.7 million and 100% debt free, paid off home and retired

[@bobcostner2238]

BS

[@rebeccashields9626]

@@bobcostner2238why would you think this is BS? I’m 37 and we just hit $500k net worth. 10 years from now we will absolutely be at $1mil with our current trajectory. And we are a nurse and accountant whose parents helped with college a little, but gave us zero cash. No doctors or lawyers or CEOs or trust funds.

[@fsufan]

@@bobcostner2238 no BS. we worked hard, saved our money into investment accounts account for 30 years. I would save we saved 15-20K a year for 30 years. building wealth is not hard just have to be smart

[@mocheen4837]

That is not BS. I just hit 51 and have saved $1.6 M. We also have 1.4 in home equity. Now with catch up contributions we can put away $60,000 per year. Last year we saved $50,000. We do not live extravagantly and try to stick to a budget. Granted we still spend more than we should. We tend to splurge on our kids. I plan to work until I am 67 so there is still plenty of time to save. I am still behind many of my peers. I know several people who retired at age 50 with millions saved.

[@bobcostner2238]

@@mocheen4837 Yeah like i said, BS. Okay guy on Ramsey payroll

[@jeremiahhoskins6065]

I wish this was taught to me back when I was in school ☹️

[@johnsantiago4810]

This is the stuff I will be teaching my kids(i have a 3 year old and a 10 year) when they grow up. I will make sure to teach them to budget, save and invest at a young age, something i never learned when i was in my teenage years.

[@bradleygraves5915]

Take a shortcut and create an investment fund in their name now and drop $2k in there. Be the custodian until they turn 21.

[@bauchwegmaenner]

@@bradleygraves5915 This is the best way to make them dependent and lazy. The more financial support children receive, the less they earn as adults." From the book "The Millionaire Next Door.

[@enricopallazzo3244]

Start an investment account for your kids when they’re young.

[@retrojay86]

Definitely something I will do

[@devpav9880]

Just start a Roth IRA in your own name when your kids are young and make them beneficiaries. They'll inherit millions tax-free.

[@retrojay86]

@@devpav9880 fantastic 😊

[@enricopallazzo3244]

@@devpav9880 For sure, I do that too, but have an UTMA and 529 for my daughter. My hope is she takes ownership of the portfolio at a young age and learns to spend money on things that increase in value.

[@missgui4400]

This is what I’m doing now. I started their 529 savings plan at birth and if they do not use all of the funds for college, I will match their contributions to their Roth with the remaining 529 balance. They will be all set once I leave this earth which is my goal. My children are my legacies that I must take care of.

[@brockmoran6352]

Love the show and love compounding interest... With that said, this example doesn't check out. Ben invests $200/mo at 10% return for 9 years, so at age 30 he has approximately $33k. Then the $33k compounds with no other contributions for 37 years at 10% return, which results in a value of approximately $1.1M, not $2.1M... Joey invests $200/mo for 37 years at 10% return, giving him a value of approximately $800k. The point still stands that early is better, but seems like a ROI closer to 12% was used in the example.

[@sophiethesloth]

When I finally sorted and began to save my emergency fund I was 33% in then crunch 2 huge emergency happened and proper kicked me to the curb New car needed and full heating pipes needed

[@DomTheK9]

"don't do something just stand there" - Jack Bogle, Vanguard

[@jimhandler1129]

If you know, you know

[@Bulletno]

you mean burning your hard earned money in Vanguard? 😂

[@zuezee3655]

How and where to go , what to do..to invest in compound org.?

[@ryankiel4895]

I did what the first example did - in 2007 when I was 32 I had 20k in retirement. The same account 16 years later is at 180k. Plus I have other IRAs. I did some stupid things along the way but at least I did that initial investing in my 20s like the guy in the first example, without which I would have had to delay retirement for several years. Invest early!

[@ilikeshroomgals]

I love videos on compound interest.

[@djsausagebiscuits]

same!

[@jimhouser2556]

growth comes from increase in Net Asset Value (share price), not compounding. when dividends are reinvested, compounding can bee seen in the quantity of shares owned, not really account balance.

[@feliciavale4279]

This is one of the only things I disagree with Dave about. Don't give up that employee match. You might be paying off debt for years, you're losing out on compound interest and the free money from your employer.

[@pds0303]

Dave does not believe in giving up the employer match. He says to cut down to whatever the minimum is to get a 100% match to pay off debts. Never give up free money.

[@blackworldtraveler3711]

I have always gotten 6% employee match and additional 3% without match but always maxed and over maxed my contributions each year anyway. Never been a big fan of the match because it's pretax. Never considered it free money because there is a tax bill +30 years later. I'm just glad I contributed 99% to only aftertax and Roth the past 30 years.

[@feliciavale4279]

@@pds0303 Has he revised his plan? I always heard him say (when in step 2) to give up all investing, including employee match plans, which I thought was ludicrous.

[@anthonycantu8879]

Don't forget that if you invest in dividend stocks and have the payments reinvested, those monthly or quarterly payments to you will add to your contributions. It could be that the $200 you invest every month would be comprised of $100 from you and $100 from the dividends. So there's your $2.4K per year.

[@manderm]

UK listener and tbh my main investment ISA's are in the S&P 500, don't see many other markets beating the American market

[@manderm]

@@k-mart7475 not been able to visit yet, but hopefully soon

[@manderm]

@@k-mart7475 but stock market wise, yeah, you'd be a fool not to invest in America for the long term

[@bradleyostmann9197]

Little confused about something, cause 401K is pretax, which for most people can change your tax bracket, in my experience, I actually don't see a huge difference in my paycheck because of this, so why through away the match?

[@Baeza_5.0]

is that first example with dividends reinvested?

[@ronaldvanengen1887]

George is Spot on!! And remember in his analogy whichever investor you are Both did very well ❤😊 But when u realize that Money stays on the planet and if that money isn't spent and passed down to the Next Generation and they leave it alone for 40 more years the money really compounds and what if they passed it own to there kids for another 40+ years That's over 120years of Compound growth ❤😊

[@ramblinmama]

Just a heads up-- the thumbnail says "Interst"

[@DeepestQuotesAnd]

2:28 can someone please explain me that chart like I'm dumb? Cause apparently I am. I just don't see how Ben can be ahead of Joey anytime here... In Ben's example, that's a 15.56% ROI

[@itsmeyourfriend1]

Does all stocks pay annual returns ? I just starting buy stocks on Meta , Amazon , Tesla and microsoft . I am planning to invest monthly in these stocks.

[@RUBY-zi2ug]

Can someone help me please! Where do I go to put my money fir the best return in compound interest savings account??????????

[@sonnysamu2645]

Only one problem with that projection is that there is no pullback, correction or recession factored in there. So the final number will be different.

[@McElvinn]

Given the current economic difficulties that the country is experiencing in 2023, how can we enhance our earnings during this period of adjustment? I cannot let my $680k savings vanish after putting in so much effort to accumulate them.

[@corrySledd]

Well the bigger the risk, the bigger the reward and such impeccable decisions are better guided by professionals.

[@sheltonPston]

With the help of an investment advisor, I was able to diversify my $550K portfolio across multiple markets, and in just a few months, I was able to earn over $950K in net profit from high dividend yielding stocks, ETFs, and bonds

[@McElvinn]

Pls who is this coach that guides you? I’m in dire need of one

[@sheltonPston]

My consultant is Nicole Desiree Simon She has since provide entry and exit points on the securities I focus on. You can look her up online if you care for supervision.

[@McElvinn]

Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.

[@TheBornGamer]

This is one of the main reasons people I know get into Cryptocurrency. Some staked coins pay around 10%, but have daily payouts which you can compound. DOT staked on Coinbase here in the UK has an APY of around 9.7%, and pays out daily. Not only that, but with everything so low at the moment, you could factor in possible growth and you may be onto a winner short term (1-5 years.. who knows!). The risk is that the whole industry is under a lot of reglatory scrutiny at the moment, but it would be interesting to see someone reply to this in a year or two, when the market will have changed substantially... will DOT even still exist?

[@sidharthsamal1967]

I did not get how compounding worked in an investment of S&P 500 index fund ? It only appreciates the value where is compounding applied unless you sell the units you don’t realise the profits

[@vicklopez1470]

Lol dude got pissed at 1:30

[@wewhoareabouttodiesaluteyo9303]

You know? I have heard this harped at me ever since I started investing; however, in my brokerage, I am always buying shares of stock and then I end up selling them to pay off debt. Weird right? I do not want to reinvest the dividends because I need the dividends to pay off bills. It always make me think back and ask myself "How much would I actually have if I just left a stock untouched since I started investing back in 2017?"

[@DevHazy]

Yeah. You gotta invest 500 a month and save the other 500. Then you’ll always have a savings to pay your bills

[@wewhoareabouttodiesaluteyo9303]

@@DevHazy That would be a good idea unless I knew that my expenses would be exactly under half of my paycheck. Back in 2017, I remember having tons of credit card debt I had to pay off. Now I work in a state government job and getting raises like crazy. I think after a 6% raise effective July 1st and paid on the 28th of this month, I will have had 24% raise overall since I was hired in not even a year; I will have enough to do that. But it is fulfilling to see a one to one with your bills when you invest in dividend paying stock.

[@penguin12902]

You need to have the mindset that your investment money doesn't exist. You put it in and you never touch it again. It's not your money anymore, it's your future self's money.

[@emojimr4427]

Yes but how do you use the S&P 500 is there a book you recommend a How To Book ?????

[@kleindropper]

Buy SPY if nothing else

[@stefanossmitty3318]

How are you asking this question when you have the ability to use the same device to look that up? There are hundreds of KZbin channels that will walk you through how to open, and fund an investment account. You have to be proactive.

[@emojimr4427]

@@stefanossmitty3318 this why i ask what books do regular ppl recommend for a beginner to read in order to learn how to efficently use the system.. Wanted experience ppl opinion before i bought one...i don't know what bothering you in life that you would have a attitude with someone asking for advice and opinions... We all learn from someone .. Get therapy ...

[@unpopularopinion149]

On top of that..lump sum investing versus dollar cost averaging performs better almost 80% of the time. I know most people need to DCA because they live on a budget but $10,000 invested all at once vs. $10,000 invested over a 5 year period would yield a higher return historically.

[@DamianBadalamenti]

This needs to be taught in highschool as one of the required courses..

[@SaintLaurent9269]

it is taught in High School in the state of Georgia and Florida

[@jiggerypokery2962]

Imagine what compound interest does to people who already have money. If I plan on saving for 40 years $1000 a month like 80% of the money I earn, the real payoff, happens after year 30. Imagine how much money you would have if you started 30 years ahead maybe from an inheritance or something. And we wonder why inequality exist and it seems impossible to overcome.

[@stormblade1199]

I mean yeah but even people who inherit lots of money (which is statistically less than 10% of the Forbes wealthiest people) had that wealth built over time. But if you really want to become wealthy, investing your monthly paycheck into a 401k or roth IRA isn't going to get you there. Maybe if you held it over your entire lifetime, and then a good chunk of your 2nd generation's. I don't know about you, but to me 1-2 million isn't a lot. When we have social media influencers nowadays in their 20s making that in a month it is absolutely asinine to trade 40 years of your life for that. You have to go down the path of entrepreneurship. But then again, that path is often full of failure, loss, sacrifice and pain. It's not easy

[@JonathanWilliam-is6wd]

“I got rich doing this”

[@JonathanWilliam-is6wd]

The first step to attaining wealth is figuring out your goaIs and risk toIerance - either on your own or with the heIp of a financiaI pIanner, and foIIowing through with an inteIIigent pIan, you wiII gain financiaI growth over the years and enjoy the benefits of managing your money.

[@JonathanWilliam-is6wd]

I am fortunate I made productive decisions that changed my finances (gathered over 1M in 2years) through my financiaI planner. Got my 2nd house in Feb, and hoping to retire soon. Give this a try and attain good-returns.

[@JonathanWilliam-is6wd]

For more lnfo Financial -Planner Rebecca Mart-Watson (in fuII)

[@michaelg61420]

If I can only afford to invest 5% right now should I do standard and have employee match? Or just do 5% roth

[@jimhandler1129]

Match first, then Roth

[@JM-kv2kn]

@@jimhandler1129what he said

[@Blazer99915]

Great advice other than don’t ever turn down a company match. you’re getting a 100% return on your investment which is higher than any interest rate that’s out there. Math doesn’t add up to not take it

[@thedopplereffect00]

And you can withdraw the match and the contribution and just pay the 10% penalty. I don't know why they don't think that's a thing

[@fissefiesta8162]

Don’t ever skip the match. That is 100% return on investment. You cannot beat that no matter how high your interest rate is

[@wewhoareabouttodiesaluteyo9303]

I only was able to get 50% match. I would get like $0.50 for every $1 I put in at my previous employer. I work in a state government now and they do not have a matching 401k. They do have a pension, but I can only get the 1.77% match if I stay for 6 years.

[@isaiahfronning5157]

I've had a 9.3% return on my Vanguard mutual funds just in the last six months. It's very reasonable to expect 10%+ annually for well managed funds.

[@stormblade1199]

Why are you underperforming the market so badly?

[@AVG336]

Definitely dont wait until youre debt free to start investing. Youll be missing out on years of compound interest $. You can attack your debt while investing simultaneously

[@stevenselleck5460]

Unless its credit card debt. Then the interest rates can be north of 20%. Hammer that first. Anything less than 10% then yes invest as well

[@NDSankar]

Where do I go to get this compound interest?

[@InvestaBoom]

Just head to the bank, where they'll make your money grow slower than a tortoise on a coffee break... Or an S&P 500 index fund.

[@levihambrick]

I disagree on the match part near the end. A 3-4% 401K match is not just 3-4%: it's a 100% instant return on investment. Not only that, it becomes a 200% return on investment ten years later, and 400% twenty years later. I understand the power of getting out of debt as quickly as you can, but mathematically giving up a 100% initial ROI is just dumb.

[@djpuplex]

Every disagrees with that and Dave's magical mutual funds that get 20%.

[@levihambrick]

@@djpuplex If you buy at the bottom of a recession, you can get close to that...again, what he's saying is that the average is 10%, so if you have a -10% one year, theoretically you can get a 20% next year and it's still 10% on average.

[@djpuplex]

@@levihambrick Recessions don't come along that often

[@ilovejettrooper5922]

Is there a link to that study of 10,000 millionaires you guys did anywhere?

[@Matthew7.7]

How does one even sign up for ETF's and compound accounts?

[@MeltingRubberZ28]

Vanguard brokerage

[@gelaende]

About compound interest: When Adam was kicked out of Paradise, 10.000 years ago, he had an account with the bank of God and in that account he had 1 cent and on that 1 cent he earned 1% interest per year. As he was unable to go back to close the account, the account is still there with in it all the accrued interest. And as God is perfect, the earned interest was not rounded up or down but always exactly added to the account. How much money is currently in the account would you think? That would be a number you have never heard before: 163.6 duodecillion dollars.

[@javajoe4]

Wonder what $452k would be on a inflation corrected term?

[@alienboss7150]

Stocks do not compound interest. Stocks are assets that go up and down in value.

[@BrianErwin]

definitely don't stop your match to pay debt. that measly $200 a month isn't going to move the needle, but it will clearly result in millions in the future like this video illustrates. i personally invest $400 a month, my job matches the $400, and throws in an additional $400 for the heck of it. that's $20k a year and i'm still paying down loans just fine. i pay $700 a month on my $24k of loans. will be finished in about four years. i could stop 401k contributions and put $1100 per month and be finished in three years, which would mean i miss $60k, not including the compounded interest

[@Nibroc67]

They ditched Arthur! For some dude name Joey?! I’m gonna riot.

[@gansito6154]

6.5% average annual return is your real return after adjusting for inflation

[@ungphuc]

Still awesome! Cuz where else you put your money in to give you 6.5%?

[@DaveM-FFB]

IF you want to begin harvesting that investment at the age of 65, you'll need to make that $10K investment at age 25. Reality - at the age of 25 I had less than $2K, and I also had negative net worth due to student loans. Fortunately, I started saving and investing at the age of 30, and I didn't stop until I turned 65 and retired in 2022. Today I'm financially independent (FI) as a result of #1-compound interest, and #2-real estate appreciation, and #3-staying the course for 35 years.

[@nomadictravelerfromTx]

Compound interest plus my real estate investments made me a millionaire. Thank you "The Millionaire Next Door" and "Think And Grow Rich".😊😊😊😊😊😊😊😊😊😊

[@R_Jon]

When you’re older, you just need to save more- but you can do this. All 5 of my kids have had investments since they were very young, 3-5 years old. My 20 year old daughter has about $100k, and the boys are just a bit behind her. My wife and I are saving about $24k/month but I’m 44, so I get the time differential. My kids will all be wealthier than us if they don’t blow it. 😂

[@tylermartin3952]

that’s amazing to be saving that much a month. If i made half that a month i’d be happy lol. may i ask what y’all do for a living?

[@R_Jon]

@@tylermartin3952 hey there. I work as a financial planner. It took me 20 years to build up my business, but now that it’s established, it just keeps going. It’s one of the greatest careers I know. You get to help people (so your clients really appreciate and respect you), your income is tied to compound interest (which is crazy), and you get to control your schedule. In the early years, I pretty much worked 24/7. Now, I only work 3 days a week and I have support staff that handle a lot of the day to day requirements. If you can hang on long enough to get enough clients to grow your business, then it really is a phenomenal career.

[@stevegolacks8731]

@@R_Jon I did what you did, but retired 2 years ago at 41. I do have the benefit of my spouse making a healthy salary, but she will be retired by 45, but she has a way to go. The day I turned 16 and got my first job, I knew I wasnt going to be limping into work at 60 years old, no way. FIRE is the way to go. Europe 6 months, and here 6 months, so i dont have the time to work even 3 days, with the 6 hour time difference.

[@R_Jon]

@@stevegolacks8731 great job! I’ve thought of that. I’m 44 and I can sell my practice right now for about $6M, and I have a few million saved, but I love helping people, and I feel like I have all the time off I need. I think I will keep this schedule for the foreseeable future. I love supporting my Junior advisors, and helping them to create wealth and realize their own dreams. I love supporting the families I work with and helping them succeed. I love giving back to my community. I love supporting charities and organizations I believe in. I have the believe that we are supposed to work, so when I’m not at the office or on a trip somewhere, I run our ranch. I think that if I was offered money today to walk away, I’d say no. As you know too, I manage about $200M, so gross annual fees are about $2M from just investments (not counting insurance, trusts, or taxes). By the time I’m 50, it will probably be worth about $600M, with market growth and new assets (I bring in about $40-50M/yr). I love using those earnings to bless the lives of others.

[@Tunechi65]

What's your daughter's Instagram 😛

[@jloop_2008]

Don't invest in actively managed mutual funds like these guys recommend. A good SP 500 index fund/etf will be just as good, if not better. Save you thousands of dollars in fees.

[@jray9661]

How do you all feel about stocks such as Apple, Tesla, or google? I’m 22. Should I invest in those stocks heavily while I’m young?

[@TheOne-vf2yw]

All in on Tesla

[@TheOne-vf2yw]

Probably go with some index funds too

[@jray9661]

@@TheOne-vf2yw what type of index fund would be good though? Like QQQ or something else? I’m not too familiar that’s why I’m asking. Thanks for the help!

[@aznplayer1125]

VOO

[@thatclutchgaming1059]

Nothing wrong with Blue chip single stocks but diversification is key to a successful portfolio

[@jakeandsarahhealthnuts3299]

Knowing this information about the person who invested for 10 years to the age of 30 and then stopped contributing but made more money then the person who started later but invested a lot longer I really do not understand why you are supposed to wait all the way until baby step 4 to invest. Some people it may take 5 to 10 years to get to baby step 4 if they have a low income and a lot of debt. If they followed Ramseys plan perfectly then they would literally miss out on hundreds of thousands of dollars of compounds interest all so that they could be debt free maybe 1 to 5 years earlier. Investing something (even if it is a small amount) should be baby step 2.

[@stevebrannon5772]

Hold on, it’s not interest making interest, its an investment earning value. The value of your investment is increasing. Interest is something the bank gives you. Currently 1 to 2%. CD’s are better but not 10%. bank interest and CD’s are very safe, no risk. Mutual funds and stocks are riskier and you need to analyze your own risk factor before investing. My wife goes for riskier investments, I am more conservative..

[@MrJimmy3459]

CDs are terrible

[@sean-mi9ng]

Of which you need to pay federal income tax on...

[@chuckmay6563]

I wish they would refer to compound GROWTH instead of compound INTEREST. Unless you are a loan shark (entrepreneur), you aren't going to average a 10% interest rate over 40 years. And while historical returns are no guarantee of future returns, that is the best data we have to go by.

[@stormblade1199]

The historical return of the S&P 500 since 1926 (97 years) is 10.17%, so I'm not sure where you got your information from

[@daddo1600]

Now talk about reinvesting the dividends to automatically buy more shares automatically.

[@user-ev7ko9jk5u]

I don't understand the maths. In 1984, the S&P 500 was at $163. $10,000 would have bought you 61 shares. Today, it's at $4839 so you would have 61 shares of that ($295,179). If you just left it and didn't buy any more shares you always have 61 shares - you have to sell to re-invest the profit. So how are they worth $400K+ like in this video? The average dividend yield was 2.22% which compounded over 40 years is $24,282. Am I missing something?

[@PaulProsperInvestments]

Yes. You may be missing the point of the video. Invest as early as possible and let compounding interest work it's magic of the long-run.

[@takeshioto]

I’m of the same thought and I think this video is misleading. You don’t gain interest by buying into S&P500. If you buy SP500 today, your investment will not compound and it will simply grow at the same rate as the index grows. You need to invest something that does give interest. Eg. Savings account, stocks with dividends, bonds etc.

[@PaulProsperInvestments]

@@takeshioto you do know that companies in the S&P 500 pay dividends, right? When those dividends are reinvested back into the ETF, you get compounding interest or dividends. S&P 500 was up 26% in 2023. That means if you had $100,000 in it, you now have $126,000, if it gains 10% in 2024, that 10% will apply to $126,000...that is the essence of compounding. When you earn on your gains and not just your principle, that's the power of the compounding effect.

[@takeshioto]

@@PaulProsperInvestments but not all the companies payout dividends, and so it’s effectively insignificant is it not? I’ve just searched a couple s&p500 etf’s and the dividend yield is 0.0%. What am I missing?

[@takeshioto]

@@PaulProsperInvestments that’s not correct is it? If I buy 100k today and say the index goes up by 10% this year, and then 10% next year, that’s effectively 20% in 2 years. My 100k will be 120k after 2 years. Not 110k after year one, then 121k in year 2. It doesn’t compound. My initial capital and investment hasn’t changed. There’s nothing to compound because it’s like a stock. If I buy a stock for 10 years with no dividends, and it grows by 100% in 10 years, my initial 100k will just be 200k. Please explain where I’m wrong? I don’t get it. Also, not all companies payout dividends and therefore it’s a small percentage of the overall portfolio that would pay out dividends, effectively insignificant. I just search a couple ETF’s that track s&p500 and they all state 0.0% dividend yield.

[@SavingsMinusDebt]

Compound interest is positive and negative. He who understands compound interest, earns positive compound interest ... he who doesn't ... pays negative compound interest. -SMD

[@fishroy1997]

How do you say average return and then give a range?

[@alexm260]

The power of compounding is truly remarkable. Which makes it all the more absurd how Dave Ramsey constantly minimizes the importance of investment costs.

[@yayano8415]

Or paying off debt before investing to benefit from said compounding

[@amireallythatgrumpy6508]

@@yayano8415 Anyone who has debt does not DESERVE to benefit.

[@yayano8415]

@@amireallythatgrumpy6508 you can feel however you want, but thinking irrationally about how you leverage money to work for you is a losing strategy

[@AVG336]

​@@amireallythatgrumpy6508😂😂 riight

[@SnifferSock]

@@yayano8415 you aren't supposed to be paying off dead for a long enough time that compounding even matter.

[@mdquik]

I’m about to sell my house and likely will make about 100k. I’m looking to invest in a retirement. I listen in all the time but…..who do I go to to get an investment started?

[@danhowell3574]

You should use 7% to account for inflation of 3% (10-3=7)

[@champhussle5458]

So.once i die n dont need the money i will.have alot... 😊

[@AmandaGatesHome]

I wish someone would have explained all of this to me when I was younger. I read books like The millionaire next door in my thirties, but I didn't need the what and the why, I needed the how. The word investing and index funds were lost on me. I didn't know where to go or how to do it, and it sounded like a rich man's game. I remember calling Vanguard when I was around 37 or 38 and in order to get financial advice it was a minimum of a $50,000 investment. I'm almost 50 now and after a divorce in 2019, I am starting all over again. I will be debt-free at the end of the year but I am just starting on my investing journey. Someone finally explained to me what a brokerage account was, where to go, how to do it, and how I can invest on my own with as little as $100 a month. Why is this not taught in schools? Do you know what I learned in high school? Typing on a typewriter, and Home Economics - how to sew, meal plan, and cook. What a waste. And now I don't have 40 years. I have, hopefully, a solid 20 years to try and manifest some sort of retirement. So thankful that things like KZbin exist now so people can learn basic, simple things.

[@rogerhoward1900]

Get in touch with chase bank I with them they offered me a brokage account free no fees to buy or sell stock none but if you need help buying stocks or advice They charge a nominal fee but it's worth it they will guide you thru the process

[@thomasmartinez3085]

I would also like to know the how to get started I live in a small town in New Mexico. Can I get this service from any bank?

[@ryankiel4895]

The Millionaire Next Door is nearly a useless book since it doesn't actually teach how to become a millionaire. It's really just a study of people who are already rich. I remember reading it and I was totally frustrated at the complete lack of direction which I needed at the time.

[@bauchwegmaenner]

People who say, 'Oh, $1 million in 40 years isn't worth as much as it is today,' are not millionaires in mindset. They only think about how to spend the $1 million and conclude that it's not much. A millionaire in mindset thinks about how to grow the $1 million and generate passive income from interest. Consequently, it's more about how people think about money here.

[@smbmx6581]

The problem I have with examples like this is that you technically can't get true compound interest using the stock market or mutual funds. Yes you can get a compounding effect using the market but because the market goes up and down, you can't use a compounding interest formula/calculator to calculate intetest. Only accounts with fixed interest rates give true compound interest.

[@ThePhukst1k]

This is absolutely and objectively false. The stock market is price mark to market based on future expected cashflows. The expectation of those cashflows or perceived risk may change, but the fluctuations you are referring to is the auction driven nature of publicly traded shares. You should really take a college course on financial theory or read a book on capital allocation to understand where and why the compounding happens, beneath the standard deviation of a stock price. To be frank, you have no idea what you are talking about. Ideological opinions such as this are foolish.

[@stormblade1199]

​@@ThePhukst1k Thank you

[@debbiericker8223]

Compound dividend reinvestment is important, too.

[@brianmcg321]

Total return is what’s important. That includes dividends. Dividends is money you already own.

[@wewhoareabouttodiesaluteyo9303]

@@brianmcg321 O_o...dividends can be from capital invested OR profit.

[@debbiericker8223]

I've reinvested the dividend shares I get annually on my Roth IRAs for 30+ years. The price per share has gone up over the years, but the number of shares I now own has grown even more.

[@qcfpwubster9262]

at trading you can do compound interest as well if you make 1-5% daily of your capital you would be a millionaire in less than 5 years if i am not wrong

[@learntogrow736]

Even inflation will compound 😊!!

[@amireallythatgrumpy6508]

The rate of inflation of 2022/23 will not last anywhere near 40 years.

[@bobbythexiv2230]

If I wanted to invest $200 a month towards an investment account to get me 10% annual return, other than my Roth Ira, where do I go? What kind of investment account? what is it called?

[@harjimbaugh4234]

open a brokerage account at fidelity or vanguard then auto deposit $200 a month from your bank account and set it to auto buy the S&P 500 index funds and you are done

[@cryptkeeper5027]

I disagree a bit. If your employer offers a match I would invest a little (say 5-8%) before being out of debt or having an emergency fund. My reasoning is that only contributing 5-8% , most people will see little if any change to their take home pay. This assumes you are contributing on a pretax basis. Why would you leave free money on the table when you would see little or no change in take home pay??

[@user-yr7ly5vq2g]

Buy the Spy :)

[@vinceliu605]

The numbers look great conceptually, but tell me where are the 10% compound interest investments on the market? Don't tell me the S&P 500 compounds 10% a year, imagine starting that in 1998, and by 2013 you barely broke even after 15 years of compound investing in it.

[@Rashaadthegr8]

The difference between starting at 20 vs 30 is actually 3-5 Million if both never stop until 65. 3 million if it returns 10% and 5 million if it returns 12%.

[@jfrontier1]

I would never recommend not taking the company match. That is 3% that is free money that compounds. You can just put in whatever it takes to match and get a lot of money set aside. Then get out of debt.

[@HOLDXSTEEL]

I hope your family has an emergency so you see the “risk” portion of this and you fail

[@robertobermeier9172]

I think the idea is that your debt is allmost allways way more than 3% so paying down the debt 1st saves more than you get for free.

[@perotal]

​@@robertobermeier9172the match is 100% return, no debt is at 100% interest

[@testaccount3880]

​@@robertobermeier9172as the commenter above said it is 100% back on your investment with a match as the company literally gives you free money. But I think the idea is that you don't want to have debt as it is a risky decision and might not pay off if you have an emergency life event

[@aolvaar8792]

A half a percent match on $10000 is $50. My company was 0.5% match.

[@FrankS111]

What is interst?

[@wewhoareabouttodiesaluteyo9303]

Money made on top of money.

[@FrankS111]

@@wewhoareabouttodiesaluteyo9303 please re-read what I said and the thumbnail of the episode

[@ThomasColt]

Have you guys heard about the 5% compounding rule for investments?

[@TheDuke792]

Yes, it suggests aiming for a 5% return on investments, compounded annually. It's a realistic goal.

[@RobertDamanii]

That's right. Over time, even a 5% return can significantly grow your investment.

[@OwenFlex]

I was told not to be fooled; stocks and ETFs aren't the economy. I had $180k waiting for the Fed to stop raising rates. Now, I'm ready to get back into the market, but it seems like the pause is forever. FAANG stocks will still rise and fall. I'm confused. What should I do?

[@RoseBalerus]

Stocks might go down further. Good luck expecting the Fed to pause rate hikes with all the hawkishness that hasn’t kept up with inflation.

[@GibsonJames-gr3on]

If unemployment stays steady while the Fed hikes rates and inflation falls back to target, a soft landing might be possible.

[@bb-1359]

In past 3 years there had been zero total

[@bigbillmusic]

So how is compounded interest larger at a younger age? The older guy in the example obviously invested much more

[@wewhoareabouttodiesaluteyo9303]

Time. Compounding is a multiplier. The APY and the fluctuations of it.

[@davidbrayshaw3529]

There are online compound interest calculators. Have a play with them. Put in a few different numbers and you'll see how it all works out.

[@nicorsar]

I’m a professor of statistics. It is the difference between an exponential distribution and a linear one. That squared term in the function makes all the difference in the world. Albert Einstein once said the most powerful force on earth is compound interest. It is mind blowing how it works when you apply the distribution to money.

[@davidbrayshaw3529]

@@nicorsar That had nothing to do with the fact that he was probably the greatest theoretical physicists of all time with an unrelenting passion for math. More to do with his bloodline, I would suggest.

[@wewhoareabouttodiesaluteyo9303]

@@nicorsar The thing though is one has to have patience. I give up on dividend reinvesting after like two months (if it is a monthly dividend payer) in favor of just taking the cash and running.

[@Ravetar101]

If it goes down 10% it has to go up 20% the next year for you to profit

[@amireallythatgrumpy6508]

Incorrect. If it goes down 10% then it needs to go up 11.1% to return to its original value. Anything over this is profit.

[@wewhoareabouttodiesaluteyo9303]

@@amireallythatgrumpy6508 I am guessing he meant to get back to the 10% return.

[@lkj0822g]

Actually, it's a bit more onerous than that. $1000 with a constant 10% yield will grow to $1100 in Year 1 and $1210 in Year 2. Take that same $1000 with a negative 10% yield will result in $900 in Year 1. To get to the same $1210 outcome, you would have to realize a 34.45% growth in Year 2. Ramsey folks play fast and loose with percentages. You have to take what they say with a grain of salt.

[@amireallythatgrumpy6508]

@@lkj0822g Fast and loose is all Americans can handle. They can't do anything above adding single digit numbers. America is one of the least intelligent countries on Earth.

[@dank1518]

Ok, country boy math; invested 1 new pickup truck 30 years ago now I could buy 5 new trucks today.

[@genxx2724]

You invested the COST of a new pickup.

[@BrotherhoodWorkshop]

I like to call compound interest "happy math."

[@tommylyeah]

Okay, where are y'all gettin' 10% APY from?