I’m going to star this blog post with some words of wisdom that my dad text my sister.
The text my sister sent me went down like this: Dad said f*** poor go for the money lol š.
That ladies and gentleman was my father in a nutshell.
Growing up my father was always telling it like it was and giving it to people straight. He didn’t really play around with or mince words. He was just raised that way.
My father grew up in the Washington DC area. He was born and raised there. Worked there all his life and retired at the age of 55.
Many of my money habits, I got from my dad. I watched him as a kid be very careful with his money and spending. He always made sure the rent or mortgage was paid first before spending on anything else. He would pay cash for everything.
One of the reasons he was able to retire was because he had a pension.
My father would brown bag it to work for lunch and believed in cooking and eating at home. I always loved watching him make breakfast in the morning. He always seemed so content when he was making breakfast and just doing the simplest of things.
That’s when I also learned the simple things seemed to make people the happiest. Therefore, I made sure to always lead a simple life. However, I also knew that I didn’t want to be broke.
I saw the difference it made to have some money in your pocket. People treat you better, they like you more, and you get better service.
I once read a book called You’re broke because you want to be and it described some sad tales of broke people.
One of the ones that really hit home for me was when a bus driver looked at a person crazy for saying the couldn’t afford the $1 bus fare.
It reminded me of the time I accidently let slip while I was in a cab “oh crap, where’s my wallet!” When the cab driver heard that he hit the brakes so hard, I almost hit the seat in front of me.
Fortunately, I did have my wallet. So the cab driver stopped looking at me like I was crazy and gave me a ride home.
That little episode taught me to keep some money on me at all times including a credit card for emergencies. You don’t want to be stuck in the middle of no where with no cash and no credit because everywhere you go, the first sign you read on any business we accept cash or credit.
I also learned not only from my father, but from Warren Buffet to pay attention to the bottom line.
Buffet knew from a young age that he should focus and surround his life on the flow of money. Therefore, he learned about investing and building businesses. If you want to have money, you need to know how to earn it and how to make it grow. So that’s what I decided to do too.
Now one thing I will tell you is that my preferred method of building wealth is to own stocks. That’s just me. After, reading tons of books and blogs about building wealth, that was my conclusion.
At this point in my life, I want less time focused on working and more time focused on enjoying the fruits of my labor!
I have been blogging for almost 5 years and it’s still one of the most fun things I do. I just combined my passions, talking finance and writing.
I remember when no one read my blog. Now I get hundreds of readers a week from all over the world from as far away as India!
However, everyone is not a fan. I actually had a reader that made a comment that I have a limited knowledge of money. Really? After reading hundreds of books on personal finance, business, and building wealth, I think I am pretty well versed in the subject.
Considering that I have been blogging about money for over four years; I think me and the topic of money are very intimately acquainted with one another.
That being said, everyone is entitled to their opinions. Maybe because I am not constantly quoting stock market gyrations or the yield curve, that individual was not impressed.
What is the yield curve? In finance, the yield curve is a curve showing several yields to maturity or interest rates across different contract lengths for a similar debt contract. The curve shows the relation between the interest rate and the time to maturity, known as the “term”, of the debt for a given borrower in a given currency.
The federal reserve has also dropped its interest rate to 0.00%. That means borrowing will become cheaper and why mortgage interest rates are so low. You know. Stuff like that.
Well guess what? That ain’t my style. And I gotta be me. This is my blog after all.
I am her to give it to you simple in terms you can understand without all the money jargon. If you’re eyes are glazing over when you read my blog, then I ain’t doing my job right.
I want to educate, but I also like to entertain because I know if I can keep you engaged, then you will come back for more and learn something along the way.
What I will say to that person is this, there are tons of blogs out there that do talk in more technical terms and this blog has named many of them here so you are always welcome to check them out too!
The reason I like to keep it so basic is that is how I like people to break things down to me. The reason I have chosen to build my wealth with stocks is because it is the simplest path to wealth.
When I did some research, I found that investing in housing only returned ~4% over 30 years. Over that same period, stocks had returned ~10%. So would you rather earn 4% on your money or ~10%?
Also with real estate, there are lots of carrying costs such as repairs and maintenance of the property, insurance, taxes, and fees. I do not have to water the plants in front of my stocks, or do any repair work to it. There is no private mortgage insurance with stocks either as you only have to pay a small expense for owning it. Therefore, I chose stocks.
Every time you buy a stock, you become an owner in that company. You now have an ownership stake and that company wants to reward you with dividends.
When you put your money to work for you instead of you working for it, you end up making way more. There are only so many hours in the day for you to work physically, but money that is invested has no such limitations.
The money you invest does not call in sick, get tired, take breaks, or even take vacations. It is working for you every single day.
And the earlier you start investing, the more money you can make.
I started investing with $50. I continued to invest aggressively. Then one day I woke up and had $100,000 in my retirement account less than 9 years later.
Interest also compounds. Meaning your money earns money. That is how wealth is made.
I also didn’t want to own 100 stocks. Who wants to manage that? I found that I could own a piece of the entire market by investing in index funds.
You can do this by investing in any fund that says total stock market index like the VTSAX at Vanguard or a 500 index fund like the S&P 500.
You can start small like I did and work your way up. The point is just to start.
Why is investing so important? It’s simple: To beat inflation.
You do not want to keep all your money in the bank and over 30 years later find out your $1 is now only worth the equivalent of 50 cents! That is inflation my friends. It erodes the value of money over time.
You need your money to keep its purchasing power by always earning more of it.
It always puts money into perspective for me on why we need it, when I wake up seeing recent headlines that people’s electricity bills in Texas were skyrocketing to the cost of $10,000! That’s insane. Some families’ emergency fund were being wiped out overnight! That could take many folks years to save. One emergency can set you back years. That is why you plan, save, and invest.
And forget rich quick. Most people I saw try to build wealth on this path ended up broke and worse off than they started. I chose to get rich slow.
If my $100,000 earns ~10% annually, then I would become a millionaire in 30 years. If that’s too long for you, then you must invest more of what you currently make, earn more money or both. I did both! And so can you.
Regardless of your method, just get started. Do a little math. I use a retirement calculator to see how much I need to save to be a millionaire in 10 years. It would take time, perseverance, and sacrifice on my part, but it’s worth it! The money in my retirement account is a scorecard. It shows me all the progress I have made along the way.
That cab driver slamming down his brakes on me and looking to put me out on the street made me realize something. I needed money to live. I needed money for the privilege and convenience of taking a cab and not the bus. That is the reason I say forget broke. Go out there, get to work, and get this money.
Legally and safely, while being socially distanced and 6 feet apart of course.
