3 Things 1-16
Thing One
Got Habits?
An article published recently on gobankingrates.com included a list of the common habits of self-made millionaires. We’ve shared our favorites below:
They’re frugal. This doesn’t mean they subsist on beans and rice and never splurge, but they do avoid impulse purchases and they know how much they spend each month on the basics.
They invest in stocks. We’ve hit this point often in our newsletter and this article’s author agrees that “…investing in stocks is the surest way to generate wealth in the long term.”
They earn compound interest instead of paying it. The author sums up this point by saying, “…The whole point of investing, after all, is to earn compound interest to become wealthy over time, which is a futile effort if the bank is collecting it from you in the form of revolving debt…”
They buy (and hold) their cars. The financial planner interviewed for the article said that “…most of his wealthy clients buy their cars instead of leasing them and retain ownership for as long as practically possible…” and he added that, “…fewer than a quarter buy new cars and opt for used vehicles instead…”
They’re persistent. On this point it was noted that, “…The majority of self-made millionaires in his study didn’t tally that second comma until they were between the ages of 46 and 60.”
They Squeeze Every Last Dime Out of Their Jobs. Here it is pointed out that self made take advantage of all employer benefits that are offered, which means things like, “…getting the highest employer match possible on your retirement plan, paying less for employer-based life and disability insurance and taking advantage of HSAs, low-cost employer legal services and employee stock purchase plans.”
They Live Well. On this final point, the author noted that people in this cohort, “…do the things that most of us know we should be doing but often don’t, including:
Reading frequently
Exercising
Eating well
Getting up early
Sleeping at least seven hours per night
Volunteering
Setting and pursuing goals
Practicing good etiquette”
Thing Two Follow-up to the Nike Comments A reader who shared last week’s newsletter about buying Nike stock versus Nike shoes reported back that he was told by his son, “That doesn’t apply to me because I don’t waste my money on expensive shoes.” We wanted to make to a couple clarifying points. First, we didn’t mean to suggest that buying expensive shoes is a waste of money. We fully acknowledge that we all need shoes and that it’s okay to spend $240 (or even more than that) to purchase a pair. By sharing the projected earnings from investing the same amount, we were only trying to show that there is an opportunity cost - a rather substantial one - associated with not investing the money. In other words, by purchasing a pair of $240 shoes instead of making a $240 investment with the return characteristics we described, the shoe purchaser could be unwittingly “costing” himself $33,000 in the long run. Second, we picked shoes in our original illustration but there is actually an infinite list of items from which to choose. Sticking with the $240 threshold, a person could easily spend that much eating out for lunch in a month. He could also spend that amount in a coffee shop in a couple of months. And he could spend it in a few minutes during an online shopping spree on any number of items. The point, again, is not that people are wasting money buying these things but rather that there is an opportunity cost and it’s at least worth considering from time to time given the potential payoff.
Thing Three Just A Thought "The first step towards getting somewhere is to decide you’re not going to stay where you are.”— JP Morgan
Kommentarer