When one thinks of acquiring wealth, the tendency is to find a way to accomplish this in the least amount of time possible. For a few, this may actually happen. Some hope of winning a lottery or by luck in gambling. To those I say, "he that lives on hope will die fasting".
Start with a 24 year old that earns an initial starting salary of $42,000 (an average between a liberal arts degree and a technical degree), and invest 20% of their salary through 401K, IRA, and savings/brokerage accounts. Let us also assume the following: A rate of return of 8%; A retirement age of 65; A 3.1% rate of inflation; An expected average salary increase of 4% annually; 30 years of post retirement life and income.
The result of this plan provides our subject with $3.9 million at age 65. At age 95 that person will have accumulated almost $9.5 million even after an annual post retirement expense of $181,000 per year. Since the S&P 500 has averaged 10.33% over the past 50 years, applying that percentage means that our millionaire retiree will have $6.3 million at retirement and will accumulate $38 million by age 95 at a lower 8% rate of return and after retirement expenses. What a great legacy to leave to children or philanthropic endeavors.
In her MarketWatch article on 9 January 2006, Andrea Coombs reported "A majority of Americans are pessimistic about their ability to save $200,000 in net wealth in their lifetimes, and more than one-fifth say the lottery is the most practical way for them to reach that type of goal, according to a new survey.
Just 26% of adults surveyed think they could accumulate $200,000 in net wealth in their lifetime, and 9% believe they could collect $1 million, according to the survey of about 1,000 Americans by Opinion Research Corporation for the Consumer Federation of America and the Financial Planning Association."
The only thing required to become wealthy is to change the way you think.
Establishing guides for the way you live and think as well as increasing your knowledge of money and finances are your best means of acquiring wealth.
Let the virtues of Mr. Benjamin Franklin be a great starting point. His 13 virtues are as follows:
1. TEMPERANCE: Eat not to dullness, drink not to Elevation
2. SILENCE: Speak not but what may benefit others or yourself; avoid trifling conversation.
3. ORDER: Let all your things have their places; let each part of your business have it's time.
4. RESOLUTION: Resolve to perform what you ought; perform without fail what you resolve.
5. FRUGALITY: Make no expense but to do good to others or yourself; i.e., waste nothing.
6. INDUSTRY: Lose no time; be always employ'd in something useful; cut off all unnecessary actions.
7. SINCERITY: Use no hurtful deceit; think innocently and justly; and, if you speak, speak accordingly.
8. JUSTICE: Wrong none by doing injuries, or omitting the benefits that are your duty.
9. MODERATION: Avoid extremes; forebear resenting injuries so much as you think they deserve.
10. CLEANLINESS: Tolerate no uncleanliness in body, clothes, or habitation.
11. TRANQUILITY: Be not disturbed at trifles, or at accidents common or unavoidable.
12. CHASTITY: Rarely use venery but for health or offspring, never to dullness, weakness, or the injury of your own or another's peace or reputation.
13. HUMILITY: Imitate Jesus and Socrates
Other great sources of information to change the way you think about wealth and money can be found in Mr. Franklin's Way to Wealth, as well as other books including "The Richest Man in Babylon" by George Clason, "Rich Dad Poor Dad" by Robert Kiyosaki, and other resources found here. Remember, "an investment in knowledge pays the best interest".
