Can anyone really get rich? Yes! Well, depending on your definition of rich, most people with the right knowledge and behaviors can invest enough to retire with dignity.
Dave Ramsey says winning with money is only 20% knowledge and 80% behavior.
20% Head Knowledge
The stock market has averaged almost 10% annual return since its inception with reinvested dividends.
You can systematically invest in the stock market with a low cost index fund, like VTSAX.
The younger you start the more time compounding has to work its magic.
Those three facts are the essential facts you need to know. And right now, you’re buying on sale due to the market dip.
80% Behaviors
You have to be patient and use dollar cost averaging to invest every month (or week) in said low cost index fund.
This requires delayed gratification. I’m sure many of knowledge of the Stanford marshmallow experiment. Although the study has it detractors, the theme is clear. If people will delay gratification, there will be better rewards for having the patience to see things through to fruition… things like small regular investments. You will not make a gazillion dollars overnight. But with a little discipline, anyone can build wealth in the long run.
Getting rich slow is all about behaviors. Avoid debt, because your income is your largest source of investment funds.
You should start referring to yourself as an “emerging millionaire.” This positive affirmation will help. Trust me. As an emerging millionaire, you can has the assurance that you will be a millionaire. (Optimist people are more likely to live to be 90 years old than pessimistic people.)
Never Invest Your Lunch Money
Another learned behavior is risk tolerance. Many noobs start of in the stock market when it is near a high. When the market inevitably takes a downward turn, the typical retail investor freaks out and defensively sells lower than when they FOMO’ed their initial investment. That is, they buy high and sell low. This exactly the opposite of what you’re supposed to do. This behavior sometimes happens, because the noobie investor is trying to get rich quick and is investing money he cannot afford to lose.
The seasoned investor uses downturns as a buying opportunity. Or they just keep on keeping on with dollar cost averaging in their index fund.
As Always…
Thanks for reading! I hope this information provides food for thought. Remember that I am not a certified financial planner, a certified public accountant, a licensed real estate agent, etc. My content is for educational purposes. I am a math educator who happens to have a finance degree. Like they say, never take financial advice from a math teacher! (Do they really say that?)
But you should spend less than you earn, invest the difference, and stay out of debt!
I would so appreciate your sharing my content with anyone you feel could benefit. And if you would like a free exploratory conversation or just want to shoot the breeze about personal finances, call me and leave a message or send a text to 570-731-0425.