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FinanceGet rich slow with the miracle of compound interest. (self.TheRedPill)

submitted by [deleted]

TL;DR Invest and get rich. Imagine having a balance on your credit card that pays you interest.

So the redpill isn't just about banging hotties and lifting. It's about making your life awesome and as a byproduct those women will want to be in it. Flashing money to attract a woman is definently a losing blue pill strategy but having a big pile in investments allows you to have freedom to accomplish more of your goals or survive tough times in the future.

So what is compound interest and why should you care? It's the thing that turns 10k into 6.5 million in 200 years. Google Benjamin Franklin compound interest experiment. Ok we don't have 200 years but what we do have is our whole lives to invest and that's a LOT of time. I'm 30 and in just about 5 years I've acumulated 100k and of that about 25k is interest and dividends. Even if I dont contribute another dime, in 6 or 7 years it will double, assuming we don't have a crash. But if we do, you just keep on investing because it will come back. Think of it as stocks went on sale. As you get older your earnings should go up and if you continue to grow your saving/investing muscle you will have massive amounts of wealth. Download a compound interest calculator and play with your numbers you'll be amazed.

So you're probably wondering where do I invest, sounds complicated. It's not at all. I would advise a Roth ira to start. 5500 is the max per year. It's not tax deductible but you have the flexibility to withdraw all of your contributions at any time without penalty if you need to use some of your built up reserves. You also have the option of using up to 10k in earnings for a downpayment on your first house when you get to that step penalty free. Obviously if you have a 401k or roth 401k that matches at work use that too. Not as liquid but adds more options if you want to take the penalty and pay the taxes. Once you max out the roth and 401k you might be able to do an HSA, next just in a regular individual account you would pay long term capital gains tax on any earnings there though.

Ok so if I get a Roth what do I invest in? Well that's simple the entire stock market. Index funds make it simple and they are extremely cheap fee wise(expense ratio). VTI, SPY, etc. You might think but I want to make more than the market why not an actively traded fund? Their fees and inconsistent returns loses in the long run. Buffet proved it. https://www.cnbc.com/2017/09/18/warren-buffett-won-2-million-from-a-bet-that-he-made-ten-years-ago.html

It's not hard but it's not easy. You have to purposefully live below your means and not buy all the fancy new toys you think you want. Now looking at this pile of cash I can't even remember what all those little self sacrifices were. I'm just thinking of how I can save/earn more so it grows to be a million by the time I'm in my mid 40s. You can do it too, start young your future self will thank you. My brother told me about the roth when I was in highschool and it took me 10 years to start. I wish I would have started sooner instead of buying that motorcycle or the 4 spring break trips I didn't really need to go on. Let me ask you, when is the best time to plant a tree? 10 years ago but the 2nd best time is today. Get started open that roth and watch your money work for you.

Anyway, not your traditional redpill lesson but hope it helps inspire someone.

Edit: 19 year old invests 30k put $100 in per month auto draft, forgot about it now 42 and its worth 1.3 million. http://www.youtube.com/watch?v=yR1uLJ2qrqs&t=11m30s


[–]Endorsed Contributorredpillbanana 247 points248 points  (19 children)

The hours you spend studying and managing your personal finance will be some of your most highly-paid hours. In the end, it could come out to thousands of dollars or even tens of thousands of dollars per hour. Compare this to the return on your time for watching professional sports or Game of Thrones.

A great book on personal investing is https://www.goodreads.com/book/show/79351.The_Four_Pillars_of_Investing

The greater lesson here is to think about where you are spending your time and what impact it will have on your life.

[–]WhorehouseVet 47 points48 points  (10 children)

I'd like to add a few more suggestions:

A Random Walk Down Wall Street by Burton G Malkiel

The Little Book of Common Sense Investing by John Bogle

Winning The Loser's Game

The Behavior Gap (You're your own worst enemy, learn to recognize your emotions)

Your Money Or Your Life (More on how to change your mindset towards money than investing.)

The Millionaire Next Door (More on how rich people live, hint:they don't flaunt it.)

I would recommend any new investors to read the first 2 books and go from there.

[–]Endorsed Contributorredpillbanana 19 points20 points  (4 children)

All are excellent books. The Millionaire Next Door has one of my favorite phrases: "Big hat, no cattle."

[–][deleted] 13 points14 points  (3 children)

I liked how it revealed wealthy business owners kids go off to college but rarely go on to create wealth trying to keep up with the jonses. Eventually inherit their parents wealth and squander it.

[–]Endorsed Contributorredpillbanana 17 points18 points  (1 child)

IIRC they mentioned that parents would rather their kids go up in class and prestige than in wealth. The legal field is more prestigious than dry cleaning yet many owners of dry cleaning businesses are multimillionaires. I've a friend who is a perfect example of this. His parents became so rich off of dry cleaning that they bought a whole shopping mall. Last I heard, my friend (early 30s) was still living at home and working on his Ph.D.

[–][deleted] 3 points4 points  (0 children)

Ph.D. for what, though? If it's particle physics, that's impressive. I can tell you as a chem major I didn't have time to work while I was in college. Some people had jobs, but they were barely part time.

50 is my cutoff for living with parents. I don't anymore for personal reasons. But I'd say if you get to 50 and still live with your parents, you should probably re evaluate.

[–]noizef 2 points3 points  (0 children)

"shirtsleeves to shirtsleeves in three generations." i think it mentioned that a few different cultures have this same maxim: the first generation makes a fortune, the second one builds on it, and the third burns it down by trying to look rich.

[–]ROLLTIDE4EVER 3 points4 points  (3 children)

"How an economy grows and why it crashes." by Peter Schiff

[–]Endorsed Contributorredpillbanana 3 points4 points  (1 child)

Peter Schiff is always entertaining and a great resource for economics and finance. I don't agree with him on everything but he always does seem to have a good argument to back his position.

[–]y_nnis 2 points3 points  (0 children)

Thanks for suggesting a book, motivating others to do the same. Have been looking for a few resources on the subject this week and this seems godsent. Cheers man.

[–]Troby01 4 points5 points  (3 children)

I have that book from my now deceased father is it still timely?

[–]Endorsed Contributorredpillbanana 3 points4 points  (2 children)

I'd go as far as to call it timeless. Some of the examples in the book are from centuries ago.

[–]Troby01 1 point2 points  (1 child)

I shall give it a read, he tried over ten years ago.

[–][deleted]  (21 children)

[deleted]

[–]HeatCreator 6 points7 points  (17 children)

Nice! Man as an 18 year old in his first year of college any advice?

[–][deleted]  (3 children)

[deleted]

    [–]Blazedazex55 18 points19 points  (10 children)

    Not OP but the best advice I would give is two fold.

    (1) Do not fall into the notion that college is where you're supposed to live care free and find yourself. You should view college as an investment (especially since you are likely paying some out of pocket $$ to be there); therefore, you should expect a return.

    (2) Obtain a degree that is in demand and pays well. It's hard to go wrong with STEM degrees but there are others that can be worthwhile as well. If you plan to study dance because you "like," don't be surprised that no one wants to pay you more than someone straight out of high school even with your "degree."

    [–][deleted] 1 point2 points  (0 children)

    A lot of people don't do science degrees because they suck at math. I busted my ass, and Calc 2 at 8am was pretty brutal. Still wasn't enough for my final courses, taking quantum and inorganic in the spring, last two classes for my degree.

    [–]WhorehouseVet 3 points4 points  (0 children)

    Get a degree that pays well and isn't horrible, such as STEM. Stay away from useless degrees like Anthropology or Philosophy.

    Money will be tight, learn to budget, and use that skill throughout your life. Live like a student for the first 3-5 years of your career so you don't get trapped by lifestyle inflation. Meet lots of people and keep a network, you'd never know who will lead you to a job.

    [–][deleted] 4 points5 points  (1 child)

    17 year old senior in high school here. I’m going to a 2 year community college next year to save money and once I get my associates I’ll transfer. I’m also planning to work during my years at community college. Do you have any advice as to how I should save up my money?

    [–]LabRat314 47 points48 points  (23 children)

    The financial independence sub changed my life. On track to retire at age 40

    [–]BoobToArmRatio 30 points31 points  (13 children)

    Glad there are other FIRE readers here. It's like swallowing the financial red pill.

    [–][deleted]  (1 child)

    [removed]

      [–]BoobToArmRatio 14 points15 points  (0 children)

      Yeah, it's pretty bad. I try not to comment on those threads because anything that suggests that people should choose their partner carefully gets downvoted. Apparently making decisions that increase your net worth are extremely important, except when you need to sign a legally binding document putting at least half your assets on the line in the name of love.

      [–]Arrys 4 points5 points  (10 children)

      Which sub is that? Got a link for the curious?

      [–]BoobToArmRatio 4 points5 points  (6 children)

      I don't know if we can link to other subs on here, but you can search for it easily. FIRE = financial independence / retire early. The sub leans a little too much to the frugal side imo though.

      There's also FatFIRE, which is a similar but smaller sub that focuses more on the income side than savings. However, most of the readers there already make or will make $300K+ salary in the near future, so reading that sub as a regular Joe is kind of pointless and a bit depressing.

      [–]LabRat314 3 points4 points  (3 children)

      I thought red pill was about self improvement. I have a grade 11 education and will make around 160k this year. If I can. You can. Excuses are only for losers.

      [–]BoobToArmRatio 6 points7 points  (0 children)

      $160K isn't impressive unless you're still in your 20s. I make over $160K and $300K isn't entirely out of reach for me, but it's still a big jump since most of my income is salaried.

      Besides, even if you reach $300K there are plenty of people on that sub with $3MM+ investible assets in their late 20s to compare to. It's already too late for me there. While I strive to improve myself wherever I can, I certainly can't go back in time.

      There's a difference between excuses and realism. I'd rather focus on what I can control and stick with realistic goals.

      [–]Arrys 1 point2 points  (0 children)

      Haha yeah I can see how that’s depressing if you’re not in the $100k club.

      I’ll take a look though, I’m always looking for more ways to save.

      [–]simkessy 2 points3 points  (7 children)

      What you do or change in your life to be able to retire that early?

      [–]LabRat314 4 points5 points  (5 children)

      Read the financial independence sub and learn. But I make a good income. Save 60% or more of all income. Invest in diversified index funds. Have rental property. And just keep on track

      [–]simkessy 2 points3 points  (4 children)

      Mind talking more about your rental properties, curious. Would love to know when you got your first, what kind of property, how much you needed to put in, how much work to maintain it, has it been worth it so far, how long have you had them, how many. Anything you wouldn't mind sharing on the topic.

      [–]LabRat314 2 points3 points  (3 children)

      At the moment. I only have 1 property. You could call it my primary residence. But I work out of town and travel so often that it would be silly of me not to rent it out. My tennant gets himself a whole house for cheap rent. He knows I come home for a few days a month. And I get a permanent house sitter that pays me. As for the financials. I put in 5% down. I've owned it for 2 years. Had it rented every single month so far. I've had to do a few things to it. Such as replace the washer and dryer. But birthing too extreme. The biggest thing is having a good responsible tennant who isn't going to wreck your shit or be short term.

      [–]simkessy 1 point2 points  (2 children)

      Oh okay, so you bought a house and rent that out. If you incorporate you could probably claim a bunch of expenses, not sure if you're doing that. That's cool though. I've been thinking about getting a small complex, and renting that out to a few families. But I have to look into it more.

      [–][deleted] 1 point2 points  (0 children)

      I retired at 36, got disabled in Iraq, so I don't work now. Finishing college, just because I only have two classes left.

      [–][deleted]  (48 children)

      [deleted]

      [–]telegetoutmyway 12 points13 points  (2 children)

      Just a little anectdote to add. I'm in my early 20's have an engineering degree, no student loans, only debt is for the house I just bought with a 3.6% interest rate. First job out of college making 70k+. Save 16% (not including employer contributions) to roth 401k. Can confirm life is awesome and pretty set from here on out. To any high schoolers, definitely crack down on school and think about scholarships, then work your ass off in college. A couple of years of hard work and planning finances, and then its easy sailing.

      [–][deleted] 3 points4 points  (1 child)

      Which engineering? I’m 21, associates/tech degree, and work as a Chemical Operator at a Polymer Plant. I work under a lot of mechanical engineers. I make roughly 50-55k a year with minimal overtime, but shift work sort of blows. I was thinking about going back for Mechanical.

      [–]telegetoutmyway 1 point2 points  (0 children)

      Systems and Industrial Engineering (systems is usually not offered as an undergraduate to my understanding, but is so versatile it's ridiculous). Industrial is a bit more niche but I enjoyed the statistics so much I ended up focusing one of my minors in it actually. Honestly any engineering or STEM degree can get you in the door of whatever you think you may be interested in later (but I would go for it because eventually you will hit a wall without it).

      [–]BoobToArmRatio 4 points5 points  (0 children)

      This post isn't bad, though I don't know how meaningful the math is since everyone's situation is different. The financial knowledge needed to know what the best choice to make in your own situation is invaluable though.

      There is definitely a point where someone's salaried income can be too low to invest meaningfully. However, I would say in the long run improving your income and number of income streams and investing excess cash at the same time is the best way to get "rich".

      [–]Troby01 18 points19 points  (21 children)

      Nice charts they do not mean anything without the interest rate.

      [–]anon35201 25 points26 points  (8 children)

      Some 40 years ago a gallon of gas was 5 cents. So failing to adjust for inflation, these numbers are meaningless. Sure you'll have literally "1.5 million dollars", but that will be just enough for a single person to afford a small trailer lot rent and cat food.

      The problem is that inflation is taking the money from the people who save it. The only way to fix this is to put your money into things that the government can't inflate away back to thin air with a stroke of their Machiavellian pen. The only way I've figured out how to do this is to purchase real estate, purchase storage buildings on that real estate and store heavy industrial tools, high quality industrial construction vehicles/equipment and then invest into systems that keep those tools busy, like little employees.

      Take the prices of sheetrock, metal/tile roofing, high quality plywood, these things stored properly lose their value very slowly, and if you keep your inventory moving while riding fluctuations up and down, you'll have buildings full of equipment you'll have spent hundreds of thousands of dollars on, which at the end of 40 years will be worth several million dollars.

      You can't beat the government, you can only play their game by forming companies around real assets and providing a good or service. The one thing government knows not to fuck with is the men who under gird the economy. That's the house of cards their precarious throne and scepter rests upon. But none of this is guaranteed, because some of you are going to be motivated enough to go out and do as I've said, and find the competition too fierce because too many of you readers rushed into something you weren't prepared to handle.

      The problem is it's like a rubber raft full of people. When everyone runs to the lucrative high-point on the raft, immediately that part is the one that sinks. While on the rubber raft, you need to run opposite way to where everyone else is going to enjoy the rising tide to lift your boats. By all means save your money, but you have to figure out how to plug the holes in the bottom of the bucket you store it in. When you solve the "hole-in-the-bucket" problem, you suddenly discover that everybody around you wants to give you their money. The game isn't about not spending the money, it's about treating each one of your dollars like a little employee and making sure they have the tools they need to depart your account every day and return a month later with 2 dollars. If you can figure that out, then saving your money is foolish advice, the correct advice is to spend it on things which provide likely return on investment. The key is understanding that money is how human labor is measured, so if you have cash in hand, you have labor in hand, If you can instruct the laborers wisely to go out and fetch more money than it cost to employ them, you can receive money for nothing more than relaying instructions. Knowledge + Employees + Tools + Opportunity + Preparation + Work + Risk + Refinement = a blast furnace that consumes one dollar, and spits out 2 dollars each iteration. Being a squirrel and locking all your accumulated Employees into a dark room makes them unhappy, and most of them escape when you're not looking.

      [–]NakedAndBehindYou 6 points7 points  (0 children)

      The only way to fix this is to put your money into things that the government can't inflate away back to thin air with a stroke of their Machiavellian pen.

      Invest in stock market index funds. Not everyone can start their own business but almost everyone can invest in the stock market.

      [–][deleted]  (2 children)

      [removed]

        [–]FriskyPiranha 1 point2 points  (0 children)

        That was a good read, thank you. Might I ask what inspired you to write it? Are you or was your father a business owner? I think a lot of young men intuit what you said, and then they arrive at the brick wall of "starting a business is a profound graduation from one's own affairs" and they settle for less, which I don't think there's anything wrong with. Leaders need followers and vice versa. The healthy compromise is to commit to your work while never forgetting that you can quit anytime and do it better, if you find out how, no?

        [–]Shaman6624 0 points1 point  (0 children)

        True, that's called real and nominal interest.

        [–][deleted]  (10 children)

        [deleted]

          [–][deleted] 2 points3 points  (0 children)

          17 year old here. At 18 should I open a Roth IRA account and just save up? I’m going to community college next year to save money and I’m going to be working also.

          [–][deleted] 2 points3 points  (1 child)

          where do you put 1K a month?

          [–]WhorehouseVet 3 points4 points  (0 children)

          Lots of people don't believe you, let's use some backtest to prove your point.

          Invest $2,000 monthly for 35 years, adjusted for inflation and rebalanced yearly, into an 80/20 split between S&P 500 and total US bond market, you get this:

          Backtest on 35 years invested in 80/20 split

          Basically you'd get $2.1 million dollars after 35 years, and that's thru the '87 crash, dot-com bubble, and FGC. Of course it's not guaranteed, but it's a pretty good bet than to just keep money in saving accounts.

          [–]Torabor64 14 points15 points  (9 children)

          Imagine you save $1000 a month for 40 years.

          Having $1.000 less every month since being 20 to have a million when I'm too old to spend my million? Who honestly things this is a good plan? Let's not even mention that a constant 5% return isn't that realistic either.

          [–][deleted]  (7 children)

          [deleted]

            [–]NitricTV 12 points13 points  (2 children)

            60 is not old and when your body is broken down and you are a greeter at Futuremart I'm gonna be laughing. Tom Brady, at age 40, looks like he is in his 20s. You should read up on his regimen.

            Just because he's not saving thousands and living like shit in his early years when he has most of his energy doesn't mean he's going to be a greeter.

            Putting away $1,000 a month is nothing when you are pulling in 5k a month. And if you always use a condom that other $4,000 will take you far.

            What age range are you doing here? Because I know for fact a 20 year old isn't making that on a regular basis.

            You are right. The annual return over the last hundred years is over 5%.

            Is it adjusted for inflation ?

            Being an alpha in this world actually sucks. You have to put sweat and tears in and be on top of your game every single day. You have to ignore the fast food and 12 hour gaming marathons. You have to treat your body as your temple and build it 7 days a week.

            This is so true I'm intermittent fasting right now and this really struck home.

            60 is not old

            Yes yes it is.

            [–]JLM19 1 point2 points  (1 child)

            Father Time always wins. No matter what. You can be really great to your body exercise be fit. I’m 24 by my old man will be 60 soon and his body has taken a beating. I’m in great shape, not built like a house by any means but physically fit. 60 is old.

            [–][deleted] 0 points1 point  (4 children)

            hey can you give the reason why you only mentioned an advanced technical degree? do STEM jobs pay more relatively?

            [–]BoobToArmRatio 3 points4 points  (3 children)

            Take the S out of STEM. The only S that's valuable in terms of making money is physics, which falls under the school of engineering at a lot of good schools. For undergrad, I would do the following to get the best return:

            1) Attend a target school and study something related to math or engineering - work in high finance.

            2) Attend a top tech school and study engineering - work as a software engineer at a top tech firm.

            3) Attend a good state school and pay as little tuition as possible. Study math or engineering - work an solid programming or corporate job.

            [–]rpleo 20 points21 points  (1 child)

            Exactly! We have enough Pussy getting courses on this subreddit.

            We need this type of useful posts in our lifestyle. Keep posting!!

            [–]BoobToArmRatio 5 points6 points  (0 children)

            What's that saying.. you can easily lose money chasing girls, but you will never lose girls chasing money!

            I know a lot of guys on here love to talk about how little they spend getting girls in bed and getting girls to buy them drinks and dinner, but if you keep the RP mindset and are loaded, it only gets easier.

            [–]2 Senior Endorsed Contributorvengefully_yours 69 points70 points  (15 children)

            Take it from experience. Do. Not. Get. married. EVER. That is the fastest way to go from having money to living in your car or under a bridge. It is impossible to save money when the state leaves you with less than you need to live, and takes more if you earn more. Imagine the time you lost you could have been earning for you, and saving for your future instead of paying her most of your gross for 20 years.

            I'd have millions right now if I'd never gotten married.

            [–]Senior EndorsedMattyAnon 39 points40 points  (0 children)

            I'd have millions right now if I'd never gotten married

            Good lesson here. Marriage is very expensive. Divorce is extremely expensive. Being tied down to one place is a massive opportunity cost, limiting your career and your options.

            The amazing thing is that it will cost you everything that you've earned so far, AND everything you'll earn in the future.

            And the real tragedy: all this for no advantage. It's not like being married makes women suddenly nice, caring, generous, appreciative, sexual or faithful. It reduces all these things. It's a massive cost, and all you're getting out of it is a lower quality of life with less options.

            Do Not Marry

            [–]WhorehouseVet 15 points16 points  (0 children)

            Wedding reception is also retardedly expensive. Just came back from a $200,000 wedding, I shit you not.

            Father of the bride was loaded, but still it's a shit tonnes of money for 1 day.

            [–]HardLessontoLearn 3 points4 points  (1 child)

            Sounds like you married poorly. Imagine the time you married you were both earning what you made, both saving for your future. Imagine if you were still married with two incomes, saving using that compounding interest. You'd be a multi-millionaire right now if you'd married better.

            [–]Apex_Steez 4 points5 points  (2 children)

            No, you'd have millions right now if you had never gotten divorced.

            [–]WhorehouseVet 13 points14 points  (0 children)

            And then there's this timely joke on the jokes sub.

            "I’m seriously thinking about re-marrying my ex-wife…But I’m pretty sure she’ll figure out I’m just after my money."

            [–]PokeyTifu99 5 points6 points  (0 children)

            Agree completely. Married with two kids. Me and my wife make well over 6 figures together. Own two houses. Never had any issues. It's about who you marry. Both of our families are in the same boat. Marriage is dying in today's society because traditional marriages and conservatism is dead with Millennials. Stats prove there is only three things you need to be financial successful. Get married, don't have kids out of wedlock, graduate high school. I'll add a fourth one. Don't get divorced. Keeping frame and being a man is the backbone to a functional marriage. Also men don't marry women with goals, if she doesn't want to be a team member then you shouldn't pick her up on the team. Men today let women live off their successes and in the end it's never enough without having goals themselves.

            [–]Trumeau 13 points14 points  (23 children)

            Vouching for this. I've been shunting money away into investments since I was 19. I'm 24 now with 110k in there.

            Now that I'm back in school I was able to loan against my investments. They're still in the account making money but at the same time I can borrow against them for below prime interest rates at any time. I'm currently y cleared for 24k of no fee funds whenever I need them.

            Do it early! You can always reevaluate your portfolio later.

            [–]majorketone 3 points4 points  (1 child)

            Im 19 now. What exactly did you invest in if you don't mind me asking?

            [–]Trumeau 3 points4 points  (0 children)

            Basically your standard equities you see suggested. I prefer something managed so I don't ever need to look at it, personally. I aim for things with a historical track record >7% after management expense cuts.

            [–][deleted]  (16 children)

            [deleted]

              [–]BoobToArmRatio 3 points4 points  (0 children)

              Personally I don't trust anyone except myself to act in my own best financial interests. If you must have someone else do it, make sure the financial advisor you get is a fiduciary, or is at least paid a flat or hourly fee. If they work for commissions they will just tell you to buy whatever gets them the biggest payout in commissions.

              Two good sources are the financial independence/retire early subreddit (read the sidebar) or the Bogleheads forum.

              [–][deleted] 2 points3 points  (11 children)

              TDAmeritrade.com is what I use, they have 100 commission free etfs. Others in the top of the thread have recommended some books to help you get started.

              [–]BoobToArmRatio 1 point2 points  (0 children)

              Great job. Starting young is the best way to go about it.

              [–]WISE_TURD 12 points13 points  (7 children)

              Remember to NEVER SELL when the inevitable crash/pullback happens and keep 10% of your portfolio in cash so you can pounce on the low prices.

              Market crashes typically redistribute wealth to those who already have it. Example from the last crash:

              • Average joe loses job during economic crash
              • Even IF joe held 10% of his overall portfolio as cash (unlikely, as he probably lives paycheck to paycheck), it's only $10k at best.
              • Joe has to either liquidate some of his retirement account to pay mortgage (incurring a 10% penalty in the process), or sell his house when both values are lowest. He realizes his losses, and is jobless.

              • rich bill's portfolio isn't as large as it was last year, but he doesn't have to sell because he held cash. In fact that 10% he held as cash is a great deal of money nominally, a little over $1 million.

              • rich bill goes out and looks for some well-located property to buy.

              • bill invests in multiple properties that total to $800k (one of which is joe's) and invests the rest in the s&p 500.

              Moral of the story: have some cash on hand and multiple streams of income so your eggs aren't in one basket. If you work in an feast-or-famine industry like oil and gas, please don't buy a bunch of shit you don't need like a fuckhead.

              [–]BoobToArmRatio 2 points3 points  (2 children)

              This is good advice. People who sell during downturns are the ones that get burned the worst.

              [–]DeterBenchPress 1 point2 points  (1 child)

              People who sell downturns and but SPX puts are fucking rich as hell.

              Or hold your shares and sell call options if you have enough.

              [–]BoobToArmRatio 2 points3 points  (0 children)

              I meant the average Joe investor that sells near the bottom and doesn't buy back in.

              [–][deleted]  (2 children)

              [deleted]

              [–]BoobToArmRatio 5 points6 points  (0 children)

              Time is indeed the most important thing, followed by health (which is a function of time, really.) Life is all about finding a balance though, and having a pathway to wealth is something that a lot of people want, especially with a TRP mindset.

              It's not about having the paper money, it's about having diversified assets and eventually becoming part of the ownership class rather than the worker class, which I think is very much part of the TRP mindset.

              [–]Archangel_1993 17 points18 points  (2 children)

              I generally agree with you but Interest rates are pretty low nowadays and that's the way the government wants it as they believe it encourages economic growth (Keynesian model). I will not go deep into this whole subject of economics, too hard to explain. I am more of a believer of Austrian and classical economics.

              However, the returns from compound interest like a savings account are low you may have gained 25k in interest and dividend (which is impress in its own right) but I am going to ask you this question how much was lost due to inflation? 25k today is not the same as 25k 5 years ago.

              If you understand that question and answer it right, then you understand the bullshit of the real estate lie that the value of property doubles every 7 years or something. (they didn't account for inflation)

              You may have gained 3% on a savings account this year but inflation was 4% this year so your purchasing power decreased or the value money went down by 1%. (just an example)

              You are very smart and having 100K in your bank account with no debt is pretty impressive and you are well off than most people. Congrats!

              I just want you to think more and expand your horizons you can get more of a return from Stocks (if you become really good with stocks you can use option to magnify your returns by 10x), Bonds or real estate (you should be aiming for positive cash flow, don't fall for the negative gearing bullshit).

              You have only reached the tip of the iceberg.

              Girls and people generally don't care if you will be rich they only care if are rich now.

              [–]BoobToArmRatio 3 points4 points  (0 children)

              Good comment.

              1) Diversification is key. I would invest in as much hands-off stuff as possible, and then focus the excess in a few areas where you think you can beat the market (because you're passionate about it and actually have the capability of beating the market)

              2) Girls do care if you will be rich, but not in the "right" way. A lot of girls that are digging for potential gold in college are going after med school guys and stuff (which is a terrible idea.) Might explain why doctors are always broke even with a high raw income.

              On a side note, I find that girls who actually understand compounding and have a good grasp on their personal finances are probably even better than men at avoiding marriage or forcing their potential spouse to sign a prenup lol

              [–][deleted] 1 point2 points  (0 children)

              Fed probably lies about the actual inflation**** rate so who knows. And if we get inflation out of control they'll tighten economic policy. I hear ya though

              [–]tanqop 8 points9 points  (0 children)

              We need more posts like this. It is so much more important than anything else. A healthy body with a healthy finance is the path to success in life.

              [–]2DamnAmerican 35 points36 points  (7 children)

              The amount of uneducated hate on here is ridiculous. Great post OP

              [–]Blazedazex55 13 points14 points  (6 children)

              It's so obvious that most of the negative replies are from people who know almost nothing about finance. Probably Chad wannabes that live paycheck to paycheck.

              [–]WhorehouseVet 10 points11 points  (5 children)

              There are some people who retardedly think being wealthy immediately equates to being betabux, so they want to be dirt poor. IDK, the male hamsters are strong.

              Money gives opportunities, and opportunities allows you to grow.

              [–]RedPilledGodEmperor 1 point2 points  (3 children)

              For the life of me, I can't understand someone who doesn't want to become rich because they don't want to be seen as betabux. I want money because it would allow me to live a dream lifestyle and remove a lot of stress. Just because you are rich, doesn't mean you have to flaunt it, but it does allow you to have your own place in a desirable location, which makes it desirable for logistics and getting women to your place (via tinder, night out, etc.)

              Would they consider George Clooney, Leonardo DiCaprio or Derek Jeter betabux?

              Probably not.

              [–]Everybodypoopsalot 4 points5 points  (0 children)

              It's mostly just the dude equivalent of those girls who think they could never lose weight becuase they have little experience in or exposure to healthy eating.

              [–][deleted] 1 point2 points  (1 child)

              I think it's more they don't want to put in the effort or self spending limits to build wealth so they hampster anyway they can to justify not improving their financial status. Personal finance is 10% knowledge and 90% behavior modification and they just aren't willing to make the necessary changes. And 5% of people might actually be retarded and can't imagine it actually works, too good to be true.

              [–]WhorehouseVet 4 points5 points  (0 children)

              Those 5% who blow their paycheques every month is what's making my $TGT stock goes up. Thank you.

              [–]guysir 10 points11 points  (2 children)

              Buy some Bitcoin too. Consider it a lottery ticket that has a decent chance of paying off in the next several years.

              [–]BoobToArmRatio 7 points8 points  (0 children)

              I'm holding some cryptos too, but that's a whole other rabbit hole compared to traditional equities...

              [–][deleted] 2 points3 points  (0 children)

              Sold my eth before it made it big, still made $400. Gains are gains!

              [–]SuperMethDragon 14 points15 points  (1 child)

              Or get rich fast with the miracle of investing in Bitcoin and alts.

              [–]CRRZY_MAN 5 points6 points  (0 children)

              Amen to that. The first best time to buy Bitcoin was in 2009. The second best time is now.

              [–]segagaga 16 points17 points  (4 children)

              I am not in America, do you have any advice for compound interest investments in UK/EU?

              [–]notevenatthestart 13 points14 points  (0 children)

              You'll be looking for a stocks and shares ISA. There are any number of providers out there, but you can find a good comparison on the website Monevator, along with introductions to most topics of relevance to investing. That's probably the best place to start.

              There's also a UK personal finance subreddit which has some useful (albeit basic) material collected on the sidebar.

              [–][deleted] 3 points4 points  (0 children)

              Idk your tax free investment vehicles but you will still be able to invest in the US economy or world economy through a brokerage firm like TD Ameritrade or one similar.

              [–]WhorehouseVet 1 point2 points  (0 children)

              Look up Sensible Investing, I believe they're UK based. They have one hr long video on index investing, highly recommended.

              Also check to see if Vanguard has offered their MF/ETF's in UK/EU, they have the lowest fees.

              [–]RavelsBolero 1 point2 points  (0 children)

              join us on the UKinvesting subreddit. some starter tips: read Tim Hale's Smarter Investing, and learn to read financial accounts. Accounts Demystified is a good book for that.

              [–]criveros 18 points19 points  (16 children)

              And here I am about to put half my savings on bitcoin.

              [–]returnofthemackX 10 points11 points  (7 children)

              Wait for the dip, don't buy the top

              [–]guysir 1 point2 points  (6 children)

              Protip: The dip may never bring it back down lower than it is now.

              [–]simkessy 1 point2 points  (2 children)

              It's literally at it's all time high right now.

              [–]guysir 2 points3 points  (1 child)

              Which means buying at any previous all-time high has led to a profit.

              [–]GenghisKhanSpermShot 7 points8 points  (0 children)

              Bitcoin has been amazing to me, just remember anything is possible. I think it has an amazing future but it's volatile, don't cash out if it takes a big dip and freak out, it does that. It's easier to gamble when you're younger but eventually it's good to diversify some, but ya I think Bitcoin has a long way to go.

              [–]no_face 4 points5 points  (0 children)

              Bitcoin bro. Was 1000 at the beginning of the year. 'Nuff said.

              [–]Insendi 3 points4 points  (0 children)

              The second paragraph opening needs more attention. I feel like someone people think TRP is just a get laid quick scheme but I’ve been following this for nearly 8 months now and while I have gotten laid, my life overall has gotten better.

              [–][deleted] 3 points4 points  (0 children)

              This is a good post for youngsters but as you're only 30, 100,000 ain't shit and neither is a million anymore, really.

              But keep on earning and it'll happen

              [–]DeterBenchPress 2 points3 points  (9 children)

              Alternative tip: Buy OTM NFLX calls during the next earning report.

              Reason: SJW will continue to abandon Hollywood, switch to Netflix.

              Result: Get really fucking rich

              [–][deleted] 3 points4 points  (8 children)

              Comon over to walstreet bets with that sort of talk. What expiry date?

              [–]DeterBenchPress 1 point2 points  (0 children)

              One week after next earnings, so its like 3 months. Buy later, keep in mind tho

              [–]RedPilledGodEmperor 1 point2 points  (6 children)

              HAHA. Funny you mention Wallstreetbets, since I frequent that sub. I have started doing call options on May 1st of this year and my options are 30% since then. $FB, $ABBV $CBOE and $V have been doing great for me. I need $COST and $JD to rebound.

              I do longer term call options. My three $ABBV Jan 2019 $95 strike calls are up 113% since I bought them on September 18th

              [–]Sebassbacchanalia 4 points5 points  (3 children)

              Can u tell us what cash u started w, how much you have added of your own capital and what the balance is? Want to see how much you’ve actually earned from the funds. I’ve been doing it for 3 years now and have put in about 30k of my own money. Over 3 years I have increased about 10% = 3k in interest. It’s not very exciting.

              [–][deleted] 2 points3 points  (0 children)

              I started with just my roth in 2012 I could add it up but it was like 4k. My money that year is up 117.79% I reinvest my dividends. I invest in VTI. 15.48% annually.

              [–]fitzaudoen 2 points3 points  (0 children)

              You might be looking at the math wrong, sp500 is up way more than that over the last 3 years. Places like E-Trade calculate the percent increase by taking asset value divided by price paid no matter when you bought it. So the stocks you bought yesterday (which have not appreciated) are weighting down the stocks you bought last year that have appreciated. So your gross return if you want to call it that is always going to be much less than the actual return you're getting from each individual stock purchase. You can work out in Excel what the gross return equivalent is of dollar cost averaging over time at a given rate of return.

              [–][deleted]  (4 children)

              [deleted]

              [–]WhorehouseVet 4 points5 points  (3 children)

              It will be so easy too, since you're used to living like a poor af student. Live like a student for the first 3-5 years of your working career and save everything, I wish someone had told that when I graduated.

              [–][deleted]  (2 children)

              [deleted]

                [–]WhorehouseVet 4 points5 points  (0 children)

                I did hustle a bit when I was in my late 20's, worked 6-7 days a week trying to bring in another buck. I wouldn't say I've made it, but now that I'm 10 years older, I can travel a bit more and work less.

                Good luck to you, your degree will be useful.

                [–]BoobToArmRatio 4 points5 points  (0 children)

                Yep, the best time to do extra work is while you're young when you actually have energy and the extra income has time to compound. At this point you're in a great position already.

                [–]fatmofoLOL 2 points3 points  (0 children)

                I'm doing this, in the UK you can contribute £20k a year tax free into a ISA, I am able to contribute the max with my salary, if my investment get 8% a year over 40 years then my investment will be over £6million by my early 60s. Over time the contribtuion amount may go up to keep with inflation so it could amount to well over double digit millions (hopefully).

                [–]PossibleNurse91 2 points3 points  (2 children)

                Love this, def post that people need to save. How much is it to open a Roth IRA?

                [–]sssozi 1 point2 points  (0 children)

                It should cost anything but if it does, it would go to hold your account open.

                I highly advise you to cap out if you can each year on Roth IRA as returns over time are really good. And it is post tax since you already get taxed before you put in. Depends how you want to see it of course, but I assume that tax now is lower than tax down the line.

                FYI You can use your Roth IRA to buy stock as well. They will require a minimum of course

                [–]sssozi 2 points3 points  (0 children)

                More posts like this. It’s important to round yourself off financially and socially, this sub focuses mainly on socially though.

                I’ve been investing since I was 16. Dad helped open my account and at 18 I’ve been on my own.

                Roth IRA and mutual funds for me but returns are good, need to contribute more and read up more.

                [–]GalacticLinx 2 points3 points  (0 children)

                this is the kind of luxuries a USA citizen can have, compound interest.

                Imagine living in a 3rd world country where the inflation beats the crap out of your saving interest.

                I hope BitCoin saves us from that, its unfair, but i cant find any wallet or vault with compound interest. The only one I found is a faucet which is one of the oldest (i wont name it to avoid spam or referals).

                But i guess is still risky to put all your savings in bitcoins. It is such a young currency

                [–][deleted] 3 points4 points  (6 children)

                At thirty, I started investing in rental properties. Bought 5, then focused on paying them off. Now, at 40, I have over 12, completely paid off, rental properties, worth over 1 million dollars. AND, they're relatively immune to economy crashes, since everyone needs a place to live, and the majority rent. Much better than the market, since it's physical assets, directly in your control.

                [–][deleted]  (1 child)

                [deleted]

                  [–][deleted] 1 point2 points  (1 child)

                  A lot more risk, not as diversified but I hear ya. I love real estate too. Wish I lived in an area that I could invest in rentals.

                  [–][deleted] 1 point2 points  (1 child)

                  I'm getting some complaints on here saying building wealth isn't going to help you get laid and doesn't need to be factored into therepill, what are your thoughts? Does building wealth and having goals help you land better quality women or doesn't matter just learn game?

                  Maybe change's your mindset confidence etc?

                  [–][deleted] 7 points8 points  (0 children)

                  It absolutely helps. Especially for attractive, post-wall women. At 40, I present myself as successful, articulate and put together. And I'm extremely in shape. It's nice to truthfully be able to casually comment about the countries I've traveled, that money isn't an issue, etc. I'm tactful and humble, but post-wall women are clued in to this. 30+ year old women will do things they didn't do in their 20's to try and convince me that they should be kept. I play the field, and do not commit, so I enjoy my turn. Women in their 20's are still thinking they can do better, so I don't have the success in that age bracket. They see me as old. I hunt where my game is, and accept it as a consequence of getting older.

                  [–]gaki123 5 points6 points  (1 child)

                  If this post were some shit like "How my gf cheated on me" or "Man loses half his assets in a divorce" and some lame rage bait shit it would have more than 400 upvotes. SAD!

                  [–]MisterMarbles1988 5 points6 points  (0 children)

                  This reads like a Trump tweet.

                  [–][deleted] 3 points4 points  (2 children)

                  Y'all need to read millionaire fast lane by MJ Demarco. In the game of life and finance, using the strategy of investing and relying on compound interest to create wealth isn't a good plan.

                  It is a strategy, but one shouldn't rely on it as their ticket to financial freedom.

                  [–]BoobToArmRatio 4 points5 points  (0 children)

                  Here we go again.. I'm not a big fan of Millionare Fastlane because not everyone can, will, or needs to create a business to become "rich". Also, not every business will succeed and many entrepreneurs fail who you will never hear about because of survivorship bias. This is not addressed in that book.

                  The book is way too binary. No single strategy will get you rich unless you do the right thing at the exact right time, which is difficult to predict. What is known is that most self-made millionaires have multiple streams of income and built their wealth over time. This includes a small number of rich, young people who built businesses and succeeded, but mostly includes people with above average incomes that simply saved and invested.

                  If you have the drive and the means to build businesses and can survive a failure, then by all means go for it. For most people though, increasing your income and building multiple income streams, limiting unnecessary lifestyle inflation, and investing in diversified assets will get you to financial independence. The amount of time it takes is much less than most people think.

                  [–]WorldNewPilla 1 point2 points  (4 children)

                  So, do you simply invest in stocks? What research do you do before hand?

                  [–]WhorehouseVet 6 points7 points  (2 children)

                  Index investing, buy the entire market so you don't have to spend time on research.

                  [–]ohsowetness 1 point2 points  (3 children)

                  Thank you for this. Which investment house / bank would you recommend starting a Roth IRA with?

                  What did you base your decision on ?

                  Gracias in advance

                  [–]BoobToArmRatio 2 points3 points  (0 children)

                  1) Vanguard, 2) Fidelity

                  I use Vanguard, but those two are the most popular. You can read the FI sub or Bogleheads if you want to research it more.

                  Edit: Oh yeah, Vanguard has minimums though, so you'll have to play around that.

                  [–][deleted] 0 points1 point  (0 children)

                  I use TD Ameritrade. They have 100 commission free ETFs, one of which is VTI which is what I buy.

                  [–][deleted] 1 point2 points  (2 children)

                  17 year old here. When I turn 18 is it a smart idea to start a Roth IRA just keep putting money in? I’m saving money rn in my savings account and I have around $1K. The only things I spend money on is my Apple Music subscription and occasional food. I’m also going to Community College for 2 years to save money and work at the same time.

                  [–][deleted] 0 points1 point  (1 child)

                  If you havnt built an emergency fund you don't need to be investing yet. Anything you invest you should assume could get cut in half short term. I'd pick up more hours at work in the mean time.

                  [–]bigOlBeta 1 point2 points  (0 children)

                  If you can read, you can learn to invest. Don’t give control of your money to anyone

                  [–]xytrooo 1 point2 points  (0 children)

                  its quite possible to live 200 years if science develops a therapy that takes a guy who is expected to live to 80 today and adds 10 years to that in the next 20 years, than 15 years over the next 20 , than 20 years over the next 20 , than 40 years over the next 20 , etc.

                  see you get more life expectancy the more time passes, you get more likely to stay, not immortal by any sense. but kind of getting less likely to die with time.

                  [–][deleted] 1 point2 points  (1 child)

                  Cool man . Any UK equivalents to Roth? Thanks

                  [–][deleted] 1 point2 points  (1 child)

                  I'm 19 and set up a Roth IRA around March, invested $2500 into a health technology mutual fund that has excellent ratings and an average 14% annual return since it's inception. Compounds monthly.

                  Been putting in about $50 a month and have actually accumulated several hundred in interest already. I'm probably going to buy 2 or 3 more funds in different sectors to diversify, but this is a lot easier than I was expecting.

                  If you're my age, save your money (if you can) while you still live with your parents and don't have bills. Invest in a Roth IRA ASAP. It's one of the absolute​ best things you can do right now to get way ahead of the curve.

                  [–]Theguygotgame777 1 point2 points  (0 children)

                  I would like to suggest a very nice book on just this subject, called "If You Can."

                  [–]6d65746164656c7461 1 point2 points  (0 children)

                  This is great. This advice is in very much need. Having your personal finance in control means freedom to chase other interests, and thus improve as a person. I have graduated in Law and in Economics (what would be in the USA two distinct majors), and have a good paying job in my country, and it baffles me how my coworkers are completely unaware of this advice (just as much as they are unaware of the redpill truths that permeate society).

                  The same discipline you develop by getting of the chair and hitting the gym is needed to avoid opening your wallet when you don't really need.

                  There are very good book suggestions in here, but I'd like to add William Bernstein's "The Inteligent Asset Allocator", as asset allocation is probably the most important factor in investment success and to create a passive income stream.

                  [–]SpecialSpnk 1 point2 points  (0 children)

                  Up vote for this. I have just recently got serious in the study of finance and investing. It has already paid off largely with changing my mentally and how I think about money.

                  Invest invest invest. The difference between someone who retires poor and someone who retires rich is only consistency

                  [–]leveler0 1 point2 points  (0 children)

                  Can agree that compound interest will not get you 'rich' by any stretch of the imagination. Saving cash is always good, but there is one concept I've only seen a couple times on this thread that I wanted to touch up on.

                  Home ownership. By definition the biggest investment of the middle class. Can be a huge money pit if you lack brain cells or luck. I bought my place at the height of the oil bust in 2015. Low interest rates locked in for 5 years, low price on the property. It's all about timing and having cash saved. Can be used to directly increase your wealth. If you're single, you can rent out rooms (or the whole house). Once its paid off it's obviously not going to cost you more than maintenance and utilities and you can take your cash and throw it around else where. When I bought my place, I made sure it had a shop. I use it to not only maintain my vehicles ie: fluid changes, tire rotations, wear part replacement. But I plan to rebuild my vehicles in it. I figure I can get thirty years out of a diesel pick up (The way I drive, the amount of mileage I may put on in a year). The biggest expense for that vehicle is the body rusting off of it every fifteen years. Buy yourself a mig welder and learn how to run a bead and lay down the spray and you can do everything yourself with enough time. That 20k investment for a used truck in good condition may last you a long long time. I've used the shop to flip/trade projects and toys so I don't have that expense. My roommates pay down the principal of my mortgage, I'm never home anyways so it's a win-win.

                  A lot can be said about purchasing required items for any sort of grid down scenario. This system is only going to be functioning provided something bad doesn't happen. IE: The Yellowstone Caldara blowing smoke and ash and inducing nuclear winter. Killing crops and burying everything under ash. Learn to enjoy yourselves. It's all meaningless anyways

                  Edit: Grammar. Probably still errors. Oh well

                  [–]Slut_Slayer9000 1 point2 points  (0 children)

                  Suggested reading for this topic: "Rich Dad Poor Dad" and "The Slight Edge" both very good books that hammer home the point of compound interest and using it to your advantage.

                  [–]Snufek 1 point2 points  (4 children)

                  What is your interest rate, that your money will double in 6 years?

                  [–]BleuNuit_ 2 points3 points  (0 children)

                  or get rich fast and buy bitcoin

                  [–]Torabor64 6 points7 points  (27 children)

                  Compound interest never made anyone rich, and certainly not in 10 years. It's actually more like living like shit during your good decades just to have enough to live when you are too old to do anything. No thanks, I'll pass.

                  Compound interest is only useful if you are already rich and want to retire.

                  [–]fla16unt 17 points18 points  (6 children)

                  What's your plan? What are you doing now?

                  Having fun in your 20s and 30s and being fiscally responsible are not mutually exclusive. I do both.

                  This year I went on three vacations outside of the US (Cancun x 2 and Puerto Vallarta). Bought two top of the line fire arms (Arsenal AK and CZ PCR cajunized) and shoot about 500 rounds a month. I also spent about $1k on tattoos, just spent $600 on new snowboard equipment, and last week I blew $500 at a strip club on a Wednesday night. I go out to eat every weekend and party "hard" at times. Pretty much money isn't an issue for fun.

                  On the flipside...I bring my lunch to work and rarely eat out during the week. I invested in weights at home so no monthly gym membership. I don't buy designer clothes or many clothes, but I am well dressed. I try not to accumulate "stuff". I'm using a Nexus P, have a 6 year old lap top, and drive a 2013 Subaru that is paid off. Those are items people feel the "need to upgrade" all the time, but I'm going to use them until they break. I only have internet (no cable) and use T-Mobile at $50 month. I live in an apartment below my means. Pretty much every purchase is scrutinized for necessity and then searched for best value.

                  The result? I have a nice savings in cash and retirement (ROTH IRA and maxed 401k) and still having fun living in California. Granted I make a decent salary, but I don't do a special job by any means.

                  So there's no need to knock this info, unless you're talking about having the balls to be an entrepreneur and being your own boss.

                  [–]BoobToArmRatio 4 points5 points  (0 children)

                  Compounding returns don't make you rich, but it's still better than almost anything else you could be doing with the money. If you think that you have to live like shit to invest, then you either are spending too much of your income or don't make enough. Both of these can be remedied. Anyone who makes enough money for a regular lifestyle and plans to be wealthy should be investing.

                  Sure, starting a business is the fastest path to $1M, but not everyone has the capability or willpower do this. Besides, successful entrepreneurs suffer the worst in their youth putting in 100 week hours with no income to get their business off the ground, so I don't really see what your point is. For self-made millionaires in the US, not everyone is a full-time business owner, but all had at least 2-3 streams of income, and I highly doubt any of them avoid investing their money.

                  [–][deleted] 4 points5 points  (14 children)

                  Go read the millionaire next door. Basically everyone gets rich through 401k or otherwise investing in their business. Doctors and lawyers and other high paying careers don't result in wealth unless you learn to save it.

                  [–]MuhTriggersGuise 3 points4 points  (3 children)

                  I max out my Roth IRA (ooooo 5.5k!!!), 401k matching, and HSA. It isn't shit compared to my income. Beyond that I have an investment account for what's left over. I live quite well in my "good decades", and yet don't flush opportunity down the toilet.

                  It's bizarre to me that you think doing something useful with your extra cash is being a "wage cuck", yet blowing it all on stupid shit is I guess... alpha?

                  I guess if the crux of your argument is name calling, it isn't very convincing.

                  [–]Torabor64 4 points5 points  (0 children)

                  You do realize that you just recognized that you are getting rich by your income, and not because of the compound interest itself, right?

                  Why do you imply that I blow my money btw?

                  [–][deleted]  (1 child)

                  [deleted]

                    [–]BoobToArmRatio 1 point2 points  (0 children)

                    HSA is available to anyone with an HDHP. Roth IRA contribution can be backdoored at any income level. 401k is not subject to an income cap.

                    But yes, even if you make $200K+ those tax deferrals are awesome and you should be maxing everything.

                    [–]LeftHello 1 point2 points  (2 children)

                    Compound interest is overrated. Yes, you should absolutely be investing and doing it, but it is way more effective to increase your savings, and increase your income.

                    Notice how every time you see articles about compound interest, they assume you are adding to the principle every month/year. Most of the final amount is just from you adding money to the principal, and a fraction is actually from the interest.

                    [–]BoobToArmRatio 1 point2 points  (0 children)

                    Yeah, but what are you comparing it to? Letting the money sit around as cash? Investing in alternative assets? The best way to make money is to do everything. Increasing amount of income and number of income streams, reducing spending to a "reasonable" amount, and investing the excess cash in whatever asset class you think has the best risk-adjusted growth potential.

                    Comparing which move will give you the best yield depends entirely on the individual person's situation. Older people with more stashed away will benefit more from investments. Younger people will benefit more from earning more money. Everyone will benefit from keeping spending in check and avoiding unnecessary lifestyle inflation.

                    [–][deleted] 1 point2 points  (0 children)

                    In the beginning, it doesn't seem like much but it has a snowball effect. Eventually your interest outweighs what you're putting in. Check out a compound interest table/calculator that shows you what you contribute vs. interest earned it will show you the tipping point.

                    [–]Senior EndorsedMattyAnon 2 points3 points  (4 children)

                    It's the thing that turns 10k into 6.5 million in 200 years.

                    Flaw: banks and governments regularly go bust. Comprehensive list here, your country likely appears a number of times and surprisingly recently: https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises

                    The odds of your money staying safe for 200 years are small. It's just too tempting for companies and governments to put their debts off into the future and then default on them when they get unmanageable.

                    One small but current example: the pensions crisis causing the city of Detroit to go bankrupt. The city pretended to act as a savings scheme for people (earn less now, bigger pension later!), which makes great short term sense on the balance sheets. They did it so much they now can't afford to pay and are defaulting on their debts. This was your pension that you worked 50 years for? Tough shit.

                    Even if I dont contribute another dime, in 6 or 7 years it will double, assuming we don't have a crash

                    The current interest rate is around 3%. Anything more than that and you're increasing the risk of losing all of it. That's 24 years to get a low risk doubling. If you want more risk then fine, but the risk lowers the effective average payback.

                    For most people, young especially, some sound advice is this:

                    Keep 3 months living expenses plus enough money to move city in cash. Live as frugally as you can until you have this. Later aim to increase this to 6 months. This is "fuck you" money - enough to be able to say "fuck you" to ANYONE in your life: your partner, your friends, your boss. This means you are no longer living in scarcity of options, because you can fuck off and leave without difficulty or hardship.

                    You have 3 months on hand in a current account. You then get another 3 months in a 3-month notice account. You won't need it instantly because you have the first chunk for that. Save what you can in government enabled tax-free accounts (varies by country).

                    The lets you leverage your primary asset - your time and skills. 5% per year on 100k is nothing compared to being able to move city and get a 10k/year pay raise every year or two.

                    In short, max out your career before trying to invest in stocks and bonds and stuff - it's lower risk, more fun, and provides better returns until your savings account is comparable to your annual wage.

                    [–][deleted] 3 points4 points  (2 children)

                    The USA had way more chance of failing during Benjamin Franklin days. Don't invest fine with me.

                    [–]novasoline 2 points3 points  (1 child)

                    The idea of being a wage slave through your youth so that when your old and can no longer get your dick up, and if the gods haven't struck you with some cancer or some brain deteriorating disease, and if the economy hasnt tanked, you can enjoy the priveledge of dying slowly but comfortably in your home... is blue pill, please send me back to the matrix type of garbage.

                    40 years is a shit load of time to not be living to the fullest of your potential. How many billions would warren buffet or bill gates pay to add 40 years back to their lives? Yet with "the miracle of compound interest" you can throw it away for a fraction of that.

                    [–]BoobToArmRatio 3 points4 points  (0 children)

                    Personally, I think the idea isn't to exchange your youth for more assets in the future. It's not that black and white. It's more about looking at the ROI of the money you spend now and deciding if you want to spend it now or want more to spend later. Spending all of your money as soon as you earn it is not living to the fullest of your potential.

                    Your wage slave comment is pretty silly given that investing is probably the best way to escape the rat race. Most people aren't going to be business owners. Even if TRP readers are more likely to start and run businesses, there will still be plenty who don't. Most people who start businesses aren't successful. Sure, some succeed on the first try, and others succeed after trying many times, but there's a lot more survivorship bias involved when you read about young, rich people than older people accumulating assets over a lifetime. Investing is something accessible to everyone. If you believe that you need to sacrificing a lot now to save for your future, I think that you need to reevaluate why this is the case.

                    For a general audience with many people living paycheck-to-paycheck and not having any savings regardless of their income level, learning about managing finances (and investing) is one of the best things they can do.

                    [–]fromthecrypt8 1 point2 points  (0 children)

                    Great addition to the trp mindset. To put it simply, be smart with your money. It’s addictive seeing your funds grow. Get the shit you really want still, but be honest with yourself when it comes to stuff you want but still can easily do without. Pick a few gems (like if motorcycles is your big passion, save up for that new bike), then save and invest the rest.

                    [–][deleted] 3 points4 points  (7 children)

                    Everything great but crisis is incoming and everything you save will be lost. Only increasing cash flow is the way to survive which means business is only way.

                    [–][deleted] 3 points4 points  (1 child)

                    Nothing lost until you sell. Only person that gets hurt on a roller coaster are the people who jump off. I'll keep buying those on sale stocks until it rebounds.

                    [–]BoobToArmRatio 2 points3 points  (4 children)

                    Ownership in a business is one of the very few ways to get rich in your 20s or 30s, but it's definitely not the only way to be rich by your 40s or so.

                    People have been calling out a crisis for the last 6 years and that's 6 years of compounding wasted. No one knows for sure when the next crash will come.

                    [–]COMMO_Fix_It_Bitch 0 points1 point  (15 children)

                    A longterm investment strategy that soley relies on time and the market not fluctuating... hey look at this compound interest calculator, it says if I get an annual return of just 8% every year for the next 10 years I will be a millionaire!

                    You're better off spending that money to increase your earning potential now with more education/certifications/etc, instead of putting it all away so it can fight off inflation, taxes, and management fees. Fucking high school level investment class bullshit post.

                    [–][deleted] 1 point2 points  (13 children)

                    I am fully aware how basic this post is. if you want to inspire a young saver you don't go into economic theory. what's your net worth by the way?

                    [–]COMMO_Fix_It_Bitch 0 points1 point  (11 children)

                    Let me just ignore the content of your post and deflect by asking you how much your net worth is

                    Try harder fuckwad. Is your next post is going to be on how to calculate how much money you'll need when it is time for you to retire and be in the post-employment phase of your life?

                    How about avoiding real estate, because owning properties and being a slumlord having renters never paid off for anyone, this is why you need to put your money into an retirement device that will penalize the fuck out of you if you even think about using it before you're 59 years old!

                    Please go on, make another shitpost about financial advice outside a dedicated sub, because you think you're dispersing wisdom and not generic pamphlet content.

                    [–]DeterBenchPress 2 points3 points  (5 children)

                    Go ahead and buy rental properties like a cuck, I am buying bank options when the interest rates rise and fuck property owners in the ass

                    Liquidity is so important in this day and age. Buy properties and you can't move for a better career, can't shift your wealth from real estate to FANG tech and then to retail

                    [–][deleted] 0 points1 point  (4 children)

                    No penalty on roth fucktard

                    [–]HeatCreator 0 points1 point  (1 child)

                    Who do I talk with to open a Roth IRA, and do I need a lot of money?

                    [–][deleted] 0 points1 point  (0 children)

                    I use TD Ameritrade. They have 100 commission free ETFs, one of which is VTI which is what I buy. There is no minimum to open the account.

                    [–]drsherbert 0 points1 point  (1 child)

                    If I start a Roth IRA, can I keep my money on the sidelines until after the market correction?

                    [–][deleted] 2 points3 points  (0 children)

                    Yeah you can leave it on the sideline and time your entry. Dollar cost averaging with regular deposits is the way people usually do it. One study said invest in bulk at the beginning every year and you'll do better over dollar cost averaging. Everytime I bought in it was basically at the top of the market, one time I got lucky and hit a 10% downswing though. It just keeps moving upwards in the long run so 5% here or there isn't the end of the world.

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