A Gusher of Money (bonds, IRA, mutual fund, daytrading)

[ndfmnlf]

When people just start out to save and invest, they get discouraged by the small amounts of money they are seeing and the slow pace of improvement in their net worths. A 10% gain on $1K is only $100. People see this piddly amount and they give up. $100 is just Saturday night bar money (to some). So they end up blowing the 100 bucks on bar hopping.

However, those who are disciplined enough to save and delay gratification, eventually see their savings reach critical mass such that the returns on the capital can no longer be sneered at. This usually starts when the portfolio hits $500K. Yesterday, for example, someone who had $500K invested in a balanced mutual fund (say VBINX) would have seen a 1% gain in one trading day. That's $5000. In one day. That's more money than most Americans make in 1 month. That's a gusher of money right there. And you did absolutely no manual labor yesterday to make that happen. You could have been sitting on the beach somewhere in Hawaii drinking mai tais, and you made more money in 1 day than most people make in a month.

The key is to reach critical mass.

[gwynedd1]

Originally Posted by ndfmnlf

When people just start out to save and invest, they get discouraged by the small amounts of money they are seeing and the slow pace of improvement in their net worths. A 10% gain on $1K is only $100. People see this piddly amount and they give up. $100 is just Saturday night bar money (to some). So they end up blowing the 100 bucks on bar hopping.

However, those who are disciplined enough to save and delay gratification, eventually see their savings reach critical mass such that the returns on the capital can no longer be sneered at. This usually starts when the portfolio hits $500K. Yesterday, for example, someone who had $500K invested in a balanced mutual fund (say VBINX) would have seen a 1% gain in one trading day. That's $5000. In one day. That's more money than most Americans make in 1 month. That's a gusher of money right there. And you did absolutely no manual labor yesterday to make that happen. You could have been sitting on the beach somewhere in Hawaii drinking mai tais, and you made more money in 1 day than most people make in a month.

The key is to reach critical mass.

And on the other hand I'd rather remember surfing at 25 than having my nurse wheel me to the beach on the finest wheel chair money could buy. But thats just an opinion because perhaps even though you passed up those beauties on the beach when you were young and capable before your non nerve sparing prostate surgery, you can find a wrinkled, old bag and look into her glaucoma eyes after a fresh change of your adult diaper.

[ndfmnlf]

Originally Posted by gwynedd1

And on the other hand I'd rather remember surfing at 25 than having my nurse wheel me to the beach on the finest wheel chair money could buy. But thats just an opinion because perhaps even though you passed up those beauties on the beach when you were young and capable before your non nerve sparing prostate surgery, you can find a wrinkled, old bag and look into her glaucoma eyes after a fresh change of your adult diaper.

You don't need much money to go surfing. Enjoying your life today and saving money for the future are not mutually exclusive.

[CouponJack]

You have to be disciplined if you want to have a comfortable retirement. I started in my early 20's...others were blowing cash out the wazoo, I put money away. You have to put money away in your 401k early and often...the power of compounding intersest is magical.

Unfortunately too many people have too many excuses not to sacrifice or be disciplined...many think they can make a quick buck by risky indiv stocks or daytrading....

[mathjak107]

everything in life is a balance. eating tv dinners and going down to the basement and looking up and seeing axels isnt much fun either.. but at least you can think about the great days surfing exotic beaches as a youngin while you stress over your next meal........

[pvande55]

I'm still looking for that $100/week money I saved by not bar hopping. Along with the $7 a day I'm saving by not smoking. Also, I knew someone who blew his money that way but died at 39. He otherwise might have had a lot of dough but what good would that have done?

[mathjak107]

we all can come up with the what if i die scenerio.. the reality is there are a whole lot more oh shi% i lived scenerios and now what do i do being im under-funded and i am stuck with a miserable life ahead of me.

[ndfmnlf]

You have to start somewhere. It's true that the task of saving vast sums of money is daunting that it discourages most people to even start. It may help if you set milestones along the way so you can mark your progress. That way, you break up the journey into shorter, more manageable, segments. Say, you save for the first $1k. Celebrate that as a milestone. (Just don't blow the whole $1k in the process). Then the next milestone would be $10K. Then $50K. Then $100K. Before you know it, you're talking real money. The bigger the number becomes, the faster it gets bigger due to compounding of reinvested returns.

Intellectually, I knew this to be the case when I started investing 15 years ago. Yet I'm still (pleasantly) surprised by the actual growth. It seems to have far outstripped my expectations. And I'm no expert investor either, just someone who is utilizing a diversified array of index funds. And that's happened during this whole stretch of time when we had the dot com bubble and crash, the Sept. 11 attacks, the Afghanistan and Iraq wars, real estate bubble and crash, the 2008 financial crisis, the S&P downgrade of US treasury bonds, and now, the Eurozone crisis.

[CouponJack]

Originally Posted by mathjak107

everything in life is a balance. eating tv dinners and going down to the basement and looking up and seeing axels isnt much fun either.. but at least you can think about the great days surfing exotic beaches as a youngin while you stress over your next meal........

Oh of course! I didn't mean one should be a hoarder/miser to the point they are miserable....

I'm just saying its much better if you can make a dollar go farther than those that burn a hole in their pockets...personal debt is a huge reason why the country is in such a mess today...

Big point was that even if you make 10-20K a year and are young, you should still be putting money away and saving...

[germaine2626]

Originally Posted by ndfmnlf

You have to start somewhere. It's true that the task of saving vast sums of money is daunting that it discourages most people to even start. It may help if you set milestones along the way so you can mark your progress. That way, you break up the journey into shorter, more manageable, segments. Say, you save for the first $1k. Celebrate that as a milestone. (Just don't blow the whole $1k in the process). Then the next milestone would be $10K. Then $50K. Then $100K. Before you know it, you're talking real money. The bigger the number becomes, the faster it gets bigger due to compounding of reinvested returns.

Intellectually, I knew this to be the case when I started investing 15 years ago. Yet I'm still (pleasantly) surprised by the actual growth. It seems to have far outstripped my expectations. And I'm no expert investor either, just someone who is utilizing a diversified array of index funds. And that's happened during this whole stretch of time when we had the dot com bubble and crash, the Sept. 11 attacks, the Afghanistan and Iraq wars, real estate bubble and crash, the 2008 financial crisis, the S&P downgrade of US treasury bonds, and now, the Eurozone crisis.

If I had $50,000 or $100,000 saved I would call that REAL MONEY.
Heck, if all my bills were paid and I had $1,000 in the bank I'd be very happy!