YouTube Link:
https://youtu.be/0OtVN2a7jac
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Description:
In this episode I go into why you should invest your extra money (in addition to your emergency fund) in the stock market.
Reason #1: keep up with inflation. This cannot be a better time to prove this. The U.S. government pumped a lot of money in the economy and that will inevitably bring the value of the $ down.
Reason #2: simply earn more money. Companies always innovate and create new and better products/services. Just look a few years back and then compare with today. We have some much more today. Things are advancing at a very rapid pace and by being in the stock market you too will take advantage and will be better off.
In the example that follows, I tell a tale about Rich and Paul. Rich and Paul are both 19 and going to college. One day Rich comes to Paul with this great idea to invest $2,000 per year from the age of 19 till the age of 27 and then stop. Paul does not like the idea very much since he wants to “live today.” He wants to go to parties, and buy the latest and greatest things. Nonetheless, he agrees that he will start investing at the age of 27. Since Paul will be late to the game, he agrees to invest from 27 till 65.
Summary:
Rich - invests from 19-27, $2K/year for a total of $18K.
Paul - invest from 27-65, $2K/year for a total of $78K ($60K more than Rich).
Assuming a rate of return of 10%, let's compare the results at the age of 65.
Rich - $1.1M
Paul - $0.95M
The delta only gets bigger, if they both keep the money invested till the age of 87 without extracting any portion, then they will have as follow:
Rich - $8.9M
Paul - $7.8M ($1.1M less than Paul).
This is only a story to illustrate my point, but nonetheless, this is very probable.
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*None of this content is meant to be interpreted as investment advice. It is for entertainment purposes only. The content in the video is accurate as of the day of the posting and may not be accurate in the future.