The Greatest Wealth Creator of All Time

Redi News ^ | March 18, 2022 | Alexander Green

[aquila48]

If you’re just tuning in, I’ve spent the last several columns explaining how everyday men and women can generate a seven- or eight-figure net worth.

Even if they’re starting from zero.

I’ve done it – and so have millions of other Americans.

Last year the Federal Reserve announced that U.S. household net worth hit a record $141.7 trillion.

Spectrem Group reported that approximately 1 in 8 American households has a net worth of more than $1 million.

How did they do it? The stories vary, but their methods are remarkably similar.

Most Americans with a net worth of a million dollars or more maximized their income, lived within their means, saved regularly, invested smartly and let their money compound for years – if not decades.

Over the last few columns, I’ve covered how to maximize your income, increase your savings and adopt the prosperity mindset of the world’s best investors.

But where should you put your money to work, in stocks, bonds, cash, gold, commodities, real estate?

You should spread your risk across all these asset classes.

But over the long haul, nothing has rewarded investors more than a diversified portfolio of common stocks.

That’s why The Oxford Club recommends them. The outperformance is not trivial.

Jeremy Siegel – a professor of finance at the Wharton School of the University of Pennsylvania and author of Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies – has done a thorough historical study of the returns of different types of assets over the past couple hundred years.

What he discovered is dramatic: $1 invested in gold in 1802 would have been worth $90.05 at the end of 2021. The same dollar invested in T-bills would have grown to $4,437. A $1 investment in bonds would have been worth $36,390.

And a single dollar invested in common stocks with dividends reinvested – drumroll, please – would have been worth over $45 million.

[aquila48]

More at the link...

[lightman]

“Most Americans with a net worth of a million dollars or more maximized their income, lived within their means, saved regularly, invested smartly and let their money compound for years – if not decades. “

...”saved up” for major purchases and paid off credit card debt immediately.

Mrs. L~ and I became totally debt-free three years ago. No mortgage. No car loans. Financial FREEDOM!

[SaveFerris]

($1 invested in gold in 1802 would have been worth $90.05 at the end of 2021)

I knew it!

When I graduated in 1802, I almost bought $30,000 in gold.

But I expect to become a mult-millionaire with my anti-aging formula.

I made up for my 1802 gold mistake in 1863 using this one weird trick.

Don’t tell anyone, though. It’s a secret.

https://youtu.be/ewj3wrIUR3s

[ProtectOurFreedom]

Buy two year old cars with 20,000 to 25,000 on the clock. Pay the loan off in three years. Keep the car for ten years. There is no greater money suck than a new car every two or three years.

[Secret Agent Man]

One thing he doesnt do though, is factor in the loss of purchasing power of the dollar due to inflation.

1 dollar into 36000 from 1802 to 20221 fine.

Now factor in inflation from 1802 to 2021 on that 36000, to see what it really is compared to the 1802 dollar’s purchasing power.

[Kevmo]

Same old standard schtick: Buy Low and Sell High.

[joshua c]

the answer is freedom

[going hot]

“C”

[sauropod]

Bkmk

[metmom]

Most Americans with a net worth of a million dollars or more maximized their income, lived within their means, saved regularly, invested smartly and let their money compound for years – if not decades.

What a novel concept.

[metmom]

We have always bought our vehicles new, but gone at the end of the month or model year, and been willing to settle for something on the lot that wasn’t moving from last year.

We’ve managed pretty well that way since they are anxious to get rid of those cars. Plus, the one advantage of buying new, even with depreciation, is the fact that the car is virtually maintenance free for those first two years, so yes, depreciation takes its toll, but OTOH, you are not putting out for maintenance repairs.

And we do keep them for 10 years and do as much of our own maintenance as we can, which includes regular oil changes.

[gattaca]

All good advice. Pay off debt, live within your means, invest...

[zeestephen]

The simplest formula is to buy and hold the S&P 500 (stock symbol SPY).

Since 1950, over any given 10 year period, the S&P 500 has out performed 80% of professional investment advisers.

The Nasdaq 100 (stock symbol QQQ) can also be very tempting, but it has higher risk than SPY.

If you bought and held QQQ in 2009, you are up 1,700%, which is up almost 2X times SPY - which is an amazing return.

However, if you bought a Nasdaq 100 mutual fund in 1992 and sold in 2009, you simply stayed even with the S&P 500 - which means you earned zero reward for accepting higher risk for 17 years.

email this chart printer-friendly format

[bennowens]

The article mentions nothing about real estate: they are not making any more of it!

[zeestephen]

Undeveloped real estate can have significant annual costs - taxes, illegal dumping, insurance, etc.

Developed real estate is usually a better investment, but then you inherit the 24-7-365 headache of residential or business tenants.

[PIF]

Most Americans were not born in 1802 ... investing a dollar in 1960-70 might be a more apt example.

[Justa]

I prefer 9th series Toyota Corolla LEs. I just have to watch the head and intake gaskets. Used replacement engines are $3k installed. My current one is an ‘06 with 390K on it. Money-saving tank.

[CptnObvious]

And a single dollar invested in common stocks with dividends reinvested – drumroll, please – would have been worth over $45 million.

And what would the equivalent invested in a ROTH IRA in a Mutual Fund like VINIX produce in the same time frame. Boat loads more. Why?

Long term and Short term capital gains distributions compounding with Quarterly dividends. Compounding on Steroids!! Plus not taxable after ones age is 59 1/2.

Our VINIX did all the above both in 2020 and 2021. Whoo.. hoo! And beat the S&P as well. A great base mutual fund for ones retirement egg!

[Elsie]

yup

[Elsie]

I agree!