Common Sense:
A Simple Plan for Financial Independence
This booklet is no longer in production, here's some of
the highlights from the best articles out of the booklet. Due to popular
demand (like dozens of your emails!) I have acquired a copy of the booklet, and
placed the whole thing on this website! It can be found at
www.achievebalance.com/commonsense !
One great chart was entitled "When 14 thousand dollars
is more than 66 thousand dollars." It showed how investing two thousand dollars
a year into a retirement account from age 22 to age 28, and then not investing
at all, could give you more money than investing two thousand dollars a year
from age 29 until age 61. If the annual rate of return was 10% (compounded
monthly), the younger investor had about 28 thousand dollars more than the
older investor. Even though the younger only put in 14 thousand dollars, and
the older had put in 66 thousand dollars. Why? Because of the law of compound
interest. The sooner you start, the sooner you can reap huge rewards. By doing
nothing, you guarantee a later benefit, if any.
Here's another wonderful example of how waiting kills.
If you want to have
$500,000 in the bank at age
65, how much do you have to put away every month? (Assuming 10% annual rate of
return, compounded monthly):
- if you start at age 25, you need to put about $79 in the bank every month.
- If you start at age 35, you need to put about $220 in the bank every month.
- If you start at age 45, then you have to put about $653 in the bank every month, and
- if you start at age 55, you have to put over $2,400 dollars in the bank every month!
If you are young enough when you read this to take
advantage of it, and do so, it was worth all the effort to put this up on the web.
So, what is the biggest financial killer of all?
Procrastination.
Waiting until you can easily afford to save, then finding out that you
never got there. Or worse is waiting for that 'perfect' investment, which of
course never comes along.
People climb the financial ladder all the time because of
self-discipline. If you don't have that, you will have a very hard time getting up the
ladder. Who cares you say? I like being higher because I have more options. When I was
making 1 dollar 70 cents an hour, I had few choices ahead of me, because I couldn't afford
them. Now, if I want to, I can afford to pay $100 to go see a Star Wars movie the
day it comes out, I just choose not to do so.
But I can enjoy thinking about it!
(If you must know, I went with my son on day three, and we paid about $22
including tickets, popcorn and drinks.)
Where should you put your money? If you 'loan' your money to
the bank, you'll get safe, low interest. If you 'own' your own company, you'll get more of
a roller coaster ride, but your rate of return will be much higher. Other
options are to ...
Note: As of February, 2003 the whole booklet is now up
on this website, so I cut this article short! To view the whole booklet, page
by page, as printed out back in 1988 by Parklake Publishers, go to
www.achievebalance.com/commonsense
| 
Site
Map
