According to a study done by NYU economist Edward Wolff, 84% of stocks are owned by the richest 10% of American households.
Even more extreme than this is the fact that the top 1% hold 50% of all stocks in America. Meaning a teeny tiny amount of Americans own trillions of dollars, and a vast majority own nothing. That type of inequality is just sad.
So many Americans are locked out of a real wealth machine by not being invested in Mr. Market.
Who is Mr. Market?
The New York Stock Exchange (NYSE) is an American stock exchange on Wall Street in New York City. With a market cap of more than US$16 trillion, the NYSE is the world’s largest stock exchange, averaging US$169 billion in daily trading value in 2013.
That would mean the richest 1% own approximately $8 Trillion worth of stocks.
Sadly, only 52% of Americans were invested in stocks.
GALLUP
Let’s fast forward just five years.
According to Barron’s, the stock market is worth $30 Trillion as of 2018. You see that?! The stock market has almost doubled in size! This is tremendous.
In 2008, most portfolios lost half of their value. Now look at us today. The S&P has more than tripled since the Recession! A trillion here, a trillion there and boom we have almost double the assets we had in 2013, the same year LeBron won his second championship ring with the Miami Heat.
Therefore, as of last year the richest 1% now own $16 Trillion dollars of wealth in the stock market.
The richest 10% has a mind-boggling $25.2 Trillion in stock wealth! Each owing over $900,000 in stocks.
Keep in mind that the bottom 50% of the poorest households have virtually no wealth as many have $0 in savings and investments.
The U.S. stock market has been on fire as it returned 22% last year.
With a 220% increase over the last decade, that means the rich are getting richer.
You need to get a piece of that stock pie in the sky
Why is it so important that you invest in Mr. Market? It’s simple. Investing is how you beat inflation.
With inflation averaging 2-3% annually, you must find a way to out run it. Investing will help you do just that.
I do not want you to miss out on the next $8 Trillion the market may gain over the next decade or so. Don’t sit on the bench! Get out there and get in the game! Nothing ventured nothing gained.
Wealth building takes time.
It’s a long game. You may need a decade or more to build some significant assets.
Did you that know with an interest rate of 10% your money doubles every 7.2 years? It’s true. It is because of the rule of 72, which states that a certain amount of compound interest will dictate how much you can earn over time.
I feel like that scene in Oliver Twist when he asks for more. But instead of food, I want dividends! My advice t to you is to invest!!!
Yes, give me some of that compound interest. It’s raining dividends and capital gains.
The first $100,000 is the hardest!
No matter how much you earn, it will take time to grow your wealth to something much grander over time.
Even with a nice return, the majority of your first $100,000 will come from your savings. The higher amount you save, the faster you achieve this goal.
I cut back on everything to get to through this first hurtle on the wealth accumulation phase.
I skipped the movies, $7 lattes, fancy vacations, new cars, clothes, subscriptions services, and nights out on the town. Put that money to work. Don’t act rich, get rich!
I know some guys that want to be rich, but spend like the world is flat like Columbus said; so they think we are going to fall off the edge and it is all going to end tomorrow, so you gotta treat yourself!
These poor souls decided to buy bottle service for a friends 45th birthday. The cost: $4,000! They split it between like four or five people.
Here is a little background on one of the fellas, let’s call him Scotty.
Scotty is still renting after being unable to afford to buy a home. Instead of banking his money for a down payment, he’s tossing around G’s more than Floyd Mayweather after signing a $100 million-dollar deal.
Sorry my man, hate to break it to you, but you ain’t “Money” Mayweather and don’t have his bank account.
Forget that! I would rather be financially independent than act rich for a couple of hours.
And the ladies loved that he spent that $1,000 on that bottle service. But then you know what happened at the end of the night, when the lights came on? All the ladies left!
I guess it was all about the bottle service. That’s just money down the drain right there. Bad money decisions happen everyday.
Maybe it really is like Jamie Foxx said, “blame it on the alcohol.”
Regardless, I want you to put that money in Mr. Market and let it grow.
If you are worried about downturns, then hedge your bets by putting money into savings as well.
Since it usually takes about 10-16 months for the stock market to recover from a crash, keep that amount of money in your savings. This will let you ride out the storm.
The goals is to not have $0 in your bank account. Something is always better than nothing.
Now save up that first $3,000, go open up a Roth IRA with a discount brokerage firm and go get started.
Don’t have $3,000 just lying around? No problem. If you can spare $100 bucks?
If so, then you can use the Automatic Asset Builder that lets you invest for just $100 a month with places like T. Rowe Price or Charles Schwab.
Now let’s go get this money. No excuses! I just gave you all the information you needed to get started.
Happy investing! And may the odds be ever in your favor.
Just one huge monthly payment could be killing your ability to build wealth. He hit the nail on the head with that statement.
I have first-hand experience with this one. I shared my experience on how I put like $200,000 in my retirement accounts just from paying off my $448.65 monthly car payment.
Cars are a financial suck for sure.
The average car payment in US is now $499. That is straight up stupid. That much invested would be over $5M at retirement.
The FT is basically doing the math that consumers need to do before making any major purchases like a new car. It was noted that, “The quality of the car park has gone up.” Meaning if you walk down many British streets you are more likely to see expensive cars.
That came straight from a report from the Federal Reserve Bank of New York stating Americans are unable to pay their bills.
Considering that the jobs report that recently came out stating job growth has surged by 266,000; it is missing key metrics in regards to whether or not families are staying above the poverty line.
If you are working multiple jobs and in line at the soup kitchen because you can not make ends meet, then something is seriously wrong.
For families that are employed, they have to get back and forth to work. Meaning a car is almost a necessity these days.
California Dreamin’ is better in a Mercedes-Benz than a Hyundai
The West Coast is infamous for its pricey luxury cars. Especially in places like California. Think Fast and the Furious.
Did you see Vin Diesel rolling around in a Prius?!!! Of course not.
Lift up the hood of any of those cars and you could find $100,000 worth of product.
As the F&F series progressed, the cars got more expensive not less!
Movies are prone to production inflation just as individuals are to lifestyle inflation.
For example, the 2014 Audi R8 featured in Furious 7 has a 4.2 coupe with manual transmission starts around $119,150 while the V10 model starts at $155,450, each including destination fees and a $3,000 gas-guzzler tax. Say what??!!!
And my favorite on the Fast & Furious list, the Lykan Hypersport, which was been unveiled at the 2013 Qatar Motor Show. W Motors will limit numbers of the car, which it heralds as “the first Arabian hypercar,” to just seven, each priced from US$3.4 million. What the heck will an oil change cost on this beast?!
Lycan Hypersport
Did the cast of The O.C. drive down to Tijuana (TJ as they called it) in a Kia? Absolutely not! Those young high rollers were riding around in high-quality luxury vehicles!
Places like San Diego and Silicon Valley do not have a mass public transit system the likes of the ones on the East Coast in New York or Washington DC metro. No sir. Those folks have to drive.
And if you have to drive everywhere from the In-And-Out Burger to CVS, then who wants to sit all day in traffic rolling around in a tiny Chevy Malibu.
You want the creature comforts you have at home on the road.
You are willing to buy all you can afford if you have to drive around every day in a car.
I understand why people are shelling out BIG BUCKS on the West Coast to drive Cadillac Escalade’s and BMW’s. Not only are they impressive driving machines, but comfortable too!
Luxury cars have a price beyond just the pricetag
Prestige vehicle sales are driving borrowers bankrupt. If you have to put $500, $600, $700 or even $900 into one household bill on top of a mortgage, then you can drive yourself right into the poorhouse quite literally!
Let’s do a little math. If you save $500.00 per month, your savings may grow to $2,797,302.30 after 40 years. This includes a starting balance of $0.00 and a 10% annual rate of return.
Starting amount
$0.00
Years
40 years.
Additional contributions
$500.00 per month
Rate of return
10% compounded annually
Total amount you will have contributed
$240,000.00
Total interest
$2,557,302.30
Total at end of investment
$2,797,302.30
That is a high price to pay just to have the BMW emblem on your steering wheel.
A lifetime of luxury car ownership and payments can leave your savings tank on $0.
Don’t do it.
With more American retirement savings on life support or at $0, you can make sure this doesn’t become your fate.
Forget buying expensive fast cars. I’d rather you drive a paid off Honda and get rich slow.
People paying it forward by becoming part of an organization as Denzel Washington and Steve McQueen did with their efforts with the Boys and Girls Club.
*Just FYI: The actor Steve McQueen grew up poor. The Boys and Girls Club gave him a clean and safe place to be in his youth. He paid it forward after he become a famous actor by asking movie studios to give him thousands of white t-shirts, socks, and personal hygiene products as part of his compensation package for starring in their films. He secretly turned around and donated all this material to the Boys and Girls Club to give out to the young men there. Just melts your heart doesn’t it.
Steve McQueen also known as “The King of Cool”
How the Teenage Mutant Ninja Turtles always looked out for the little guy.
TMNT film circa 1990
The friendship between Shaggy and Scooby-Doo. Those two they just warm my heart.
Some of my favorite singers that have turned their talent into success are Whitney Houston, Pat Benatar and Toni Braxton.
One of the things I remember Ms. Braxton saying, “music is not about you just saying what you think, but how you make people feel.” Her music and voice have always made me feel good.
Seeing her up on that stage performing recently at the American Music Awards, reminded me of all the reasons I liked her; she has a gift for making you feel good with the words she sings that transcends whatever hard times you are going through in that moment. She makes you feel happy.
Toni Braxton performs onstage during the 2019 American Music Awards at Microsoft Theater on November 24, 2019, in Los Angeles, California. (Kevin Winter/Getty Images for dcp)
And speaking of people that inspire you with their words, I would like to introduce you today to someone who has not only done that for me, but for millions of people around the world through his writing on personal finance. The one and only Mr. JD Roth.
GBM is the place where we like to get down and dirty into the math behind building wealth, but we keep the jokes clean. Our jokes here are like a Hallmark card, GBM cares enough to send the very best! Even my tweets are called Lipstick Confessions!!! haha 💋Smooches
Below is just a taste of what GBM has to offer. This blog ages like fine wine; it only gets better with time. No topic is off limits!!! Not even French Fries!!
All the reasons I want you to pursue financial indepence.
1. Freedom 2-100 see number one
That is the answer always, in the illustrious words of #buzzlightyear To infinity and beyond. 😂
I’m like Space Ghost Coast to Coast. Booking celebrity guests for my audiences reading and fiscally literate pleasure.
Fun Fact: The original pilot of Space Ghost C2C was produced in a closet, and the guest was Denzel Washington (second mention in this post cause Denzel is just everywhere). It was green-lit as a series on the Cartoon Network in 1994 and went on to huge success.
Therefore, if you are looking to start a podcast, let this be inspiration to know it is okay to start it on a shoestring budget and in your closet.
Let’s get down to the interview.
Topic du jour: The tortoise wins the get rich race every time. Who is the man behind the tortoise shell?
Subject: Men who talk money. How to Get Rich Slow?
GRS JD Roth: YES, I would be happy to do your interview.
Ladies and Gentlemen, please put your hands together for Mister JD Roth!!! The founder of Get Rich Slowly.
ALLOW ME TO INTRODUCE MYSELF
GBM Miriam: It was great meeting JD Roth of Get Rich Slowly at FinCon 18 in Orlando. I had seen his picture on the blog-sphere so many times that I knew who he was on sight. I tried to keep a calm and cool composure, but on the inside I was screaming, “IT’S JD ROTH!!!!!” Over and over in my head.
Imagine my surprise when I got to ride shotgun with him on our way to a restaurant for a fellow bloggers birthday.
You can check out more of this story on my post about my very first FinCon called FinCon The Recap from your Friendly Neighborhood Greenbacks MagnetPart I and Part II.
We are in the car with Liz of Chief Mom Officer, Military Dollar, and Erin of Reaching for FI. In a car full of women, he was totally cool driving while listening to Taylor Swift. Yes, I found out that JD is a T. Swift fan. I am too. It’s like john jacob jingleheimer schmidt up in here!!!
Here is proof here!! I just so happen to think Taylor Swift is pretty awesome too! 😉 Great minds think alike. I literally just posted tweets on Taylor Swift and Lizzo last week. 😂👍
Just sent @BitchesGetRich a 2000-word email (yes, for real) on why I love both @Lizzo and @taylorswift13. Not much personal finance in it, I'm afraid, but a lot of personal conviction. Because these two women are awesome!
My dream concert is a Lizzo/Taylor Swift collaboration.
I figured out how to control my spending. If I carry the world's tiniest purse, like #LizzoAtAMAs, I could save a fortune. There's no way I could carry a wallet or credit cards in that 🤣 #TuesdayThoughtspic.twitter.com/ReXIL7u9kA
This is how I felt getting to interview JD. Over the moon and on top of the world. After three years of blogging, I made it. I’m still here. Anything is possible if you work hard enough for it. 😉So Grateful.
JD STARTS A BLOG ABOUT GETTING RICH
1. What prompted you to start a blog about money? How much makes you feel rich?Would you say $500k, $1M, $2M, or more?
I started Get Rich Slowly for three reasons. First, I wanted to document my own journey out of debt. Second, I thought maybe I could help other people learn to manage money as I improved my own financial skills. Finally, I hoped maybe I could make a few hundred bucks per month to supplement my income.
I had NO idea that starting Get Rich Slowly would change the trajectory of my life, financial and otherwise. It wasn’t even something I could have conceived at the time. Yet it changed everything.
How much makes me feel rich? That’s a great question. It doesn’t take much. I grew up poor. My family lived in a run-down trailer house in rural Oregon. My father was often out of work. Sometimes we had to take assistance from our church in order to get by. Today, I have far more money than my parents ever did. I feel very rich. But I don’t know what dollar amount leads to that…
GBM Miriam: Well ok. Thank you for your honesty. It is always appreciated. I fell into learning about money by accident. I was at my boyfriend’s place when I saw a Kiplinger magazine lying around. I just so happened to pick it up…
2. Any favorite finance books? How come?
I’ve read and enjoyed many finance books, but my favorite books about money usually aren’t actually books about money. What I mean is that often the books that I believe will most help people with their finances aren’t financial books. They’re only tangentially related to finances.
For instance, I think The Seven Habits of Highly Successful People is probably one of the most helpful book anyone can read if they’re struggling to improve their finances. The ideas and philosophy it conveys are so valuable in developing a successful financial mindset.
GBM Miriam: One of my top favorites is The Millionaire Next Door. That and the one you named are some good reading. 👍
3. What are you reading right now? What’s on your night stand?
Haha. I always have several books going at once. Right now, I’m reading:
* Wake Up and Live! by Dorothea Brande
* House of Suns by Alistair Reynolds
* Y: The Last Man by Brian K. Vaughan
* Deep Work by Cal Newport
This “many books at once” habit kind of goes against the whole Deep Work philosophy…
4. One thing people may not know about you?
When I left for college in 1987, I thought I was going to be a religion major. My aim was to get a religion degree, then become a Christian missionary. I thought I’d ultimately end up as a church pastor.
GBM Miriam: I did see you mention something about that on your blog. I put a link to that story in your response for readers to be transported there faster than Marty hitting 88 mph by clicking on college in 1987.
5. What’s in your wallet? How did you start building wealth?
It contains my debit card, my business credit card, my personal credit card, my Apple card, maybe $40 cash, and my insurance info (health and vehicle). That’s it.
I started building wealth through a two-pronged attack. First, I reduced how much I was spending. Second, I worked to build my income. Basically, I did my best to work both sides of the wealth equation (income and spending) in an attempt to grow my saving rate as high as possible.
Well said. So that’s what I did. Unlike that episode of King Meets Queens, when Carrie buys thousands of dollars worth of expensive clothes, keeps the tags on them to return them for a refund (get this because she could afford them *ahem* $2,000 Chanel suits) and said this to her husband…
If this sounds like you, please stop reading THIS and go read the Get Rich Slowly archives right now! If you want to get rich, cut the excuses and get fiscally educated!!!
If you are truly fiscally clumsy, then try the lazy method of investing. I would use Swensen’s model that he crafted for Yale University. With over $27 billion dollars under management, the Yale endowment is the second largest college endowment in the world (Harvard is #1). Just watch the video. Now you and Rory Gilmore will have something in common.
And if this is too much, just park your investments into a total stock market fund like the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) or Vanguard Total Stock Market ETF (VTI).
BONUS ROUND
Bonus Questions (pick any of the questions from the top or below that you want to answer)
6. Any life or money lessons from a favorite movie or TV show you would like to share?
I’m partial to Mr. Roger’s philosophy of loving others and encouraging others to love. He believed in accepting people for who they were, regardless of who they were. I subscribe to that ideal too.
GBM Miriam: Good stuff. I ❤ Mr. Rogers I wanted to take a ride on that train soooo bad! It looked like so much fun.
7. If you found a lottery ticket that ends up winning $1.5 million. What would you do?
I would buy new cars for me and my girlfriend. I’d get her a Tesla Model 3. I’d buy myself a Mini Cooper — the electric model, if it ever gets released. I’d stick the rest of the money in the bank.
GBM Miriam: A mini Cooper eh? I can dig it.
But that Tesla looks sexy.
And love those falcon wing doors.
Car Magazine UK Tesla photo
8. Who is your favorite X-men, Justice League, Avengers or comic book character? Why?
I’ve always been partial to nerds from the Marvel universe, characters like Cyclops from the X-Men or Mr. Fantastic from the Fantastic Four.
GBM Miriam: You are probably wondering why I asked this question. Beside being a huge cartoon and Mavel fan, I actually named this blog after a Marvel comic book character; Magneto. 😉
Just FYI: We skipped a few numbers and moved on to question 11.
11. If both a taxi and a limo were priced the exact same, which one would you choose?
Neither. I would probably walk, if I could.
GBM Miriam: Yeah, that’s me. I love to walk. I’m like Elizabeth Bennett in Jane Austen’s Pride and Prejudice.
12. What song or songs best describes your work ethic?
“Don’t Worry, Be Happy” 🙂
13. What would you do if you just inherited a pizzeria from your uncle?
I would sell it, if it were profitable. Hell, I’d sell it even if it weren’t profitable. That sounds like too much work!
GBM Miriam: You may be right. I know it’s just a cartoon but they worked the crap out of Doyle in that pizza place in Galaxy High!! 🤣
14. What was your best MacGyver moment?
This question is so NOT me. I’m not a MacGyver type. That said, my best MacGyver moment was probably installing a new tape deck in the 1993 Toyota pickup I bought last January. Admittedly, I had instructions for this project, but it was still pretty MacGyver-y for me. Now I can listen to cassette tapes as my dog and I cruise around Portland. 😉
15. If I gave you $40,000 to start a business, what would you start?
I know the answer to this! I’d start a blog. In fact, I’ve spent a similar amount to launch blogs in the past — and they’ve become businesses.
GBM Miriam: Why am I not surprised. 😆 I love blogging too.
How I feel about blogging: “Tonight, darling, we are going to right a lot of wrongs. And we are going to wrong some rights. The first shall be last; the last shall be first; the meek shall do some earth-inheriting.” -Margo Roth Spiegelman, Paper Towns by John Green
Cara Delevingne as Margo Roth Spiegelman in Paper Towns
New at the GRS blog: A look at how who we are (and who we want to be) shapes our financial lives: https://t.co/1efsBn9clQ — This is my first longer piece since deciding to NOT publish so often. It was fun to write.
16. If you had $2,000, how would you double it in 24 hours?
Hm. I’m not sure. There’s no reliable way to do this, of course. My inclination would be to pick a game of pure chance, such as roulette, then to make a single bet that would either double the money or lose it in one go. Using that roulette example, if I bet all $2000 on, say, even numbers or odd numbers, I’d have about a 48% chance of doubling my money and a 52% chance of losing it all.
Really, though, there’s no sure way to do this.
GBM Miriam: That’s JD. He always gives it t you straight and keeps it 💯just how we like it.
For example, he just put this out there for our fiscal viewing. Check out his post on Our first annual family meeting. Bringing people and finances together. As a financial blogger, that just melts my heart ❤right there.
THE END
GBM Miriam: Thank you JD!!! It was an absolute dream come true and a pleasure to have you stop by Greenbacks Magnet.
It was my honor to be your host this evening. See you at FinCon 2020. The year of perfect vision!!! Until we meet again!!! I bid you farewell.
Want more fiscal nuggets of wisdom, from the JD Roth?
