Recently I presented to a few local high school personal finance classes, and I was blown away with how much these kids want to learn. The engagement and questions that they asked absolutely blew me away. I talked and impressed on them two things; the need to invest ASAP and the importance of learning it yourself. When I was in high school, no one told me how important learning how to invest could be. (Or if they did I didn’t listen.) So, I’m going to ask you the same thing that grabbed their attention. How much actual money would it take for you to learn something new, even if you weren’t really interested in that topic? $1,000? $100,000, $1 Million?
The reality of the finance industry is they have made investing so dang scary that most people (including my wife) would just rather pay someone else to deal with the headache. No one puts into numbers how much this will cost you over your lifetime and that’s why there is an enormous industry that is thriving. Here are the hard numbers: if you’re paying your advisor 1% AUM (Assets Under Management) and you start maxing out a Roth IRA ($7k per year) at 18 years old into an S&P 500 index fund, you’re paying a financial advisor $1 MILLION by the time you turn 65!!!
8% Return
7 % Return
Holy freaking cow, that’s a lot of money. AND that’s just a Roth IRA!! That number just gets higher when you add in a 401k, 2 IRA’s, multiple 529s; can you see how much money you’re losing in the long run?
That’s what I told these high schoolers. If I could pay you a million bucks would you learn a skill that you’ll use the rest of your life? That got heads off the desk, that got kids paying attention. Those aren’t just made believe words and numbers though. Actual hard numbers back it up and show how this is something that you cannot miss out on.
I hear a lot of “my financial advisor knows what investments I need to be in and can outperform the market.” BULL. If your financial advisor could outperform the S&P 500 over the long run, they’re not going to be working in MISSOURI or any other small town! They’d be managing billion-dollar hedge funds on Wall Street. Even the great Warren Buffett doesn’t even believe in those guys. Buffett challenged a hedge fund manager to a bet; the winner gets $1 Million. Buffett picked the S&P 500 index fund and beat the manager. If a hedge fund manager can’t beat the market, do you think your financial advisor can? And if your advisor can’t beat the market, how much more above that AUM fee are you missing out on?
Odds are you aren’t in high school, but what if you’re a 40-year-old parent that’s looking to do more. Maybe it won’t save you $1 Million, but it is still worth it to figure this out. What kind of legacy do you want to leave your kids? If you’re not going to teach them about personal finance, who is? Teach them it’s never too late to learn something new. You can show them why this is important and the impact that it can have on your life. Learn this together and change your life, create Generational Wealth.
Ask our 3- and 6-year-old about money and they’ll tell you what to do. Last year, our 6-year-old even taught his pre-school class that we use index funds; when it’s green we make money and when it’s red we buy more. If he can hang on to this mentality throughout his life, can you imagine how much that could change the trajectory of his life?
I don’t care that they’re young, Personal Finance needs to be SHOUTED from the highest mountain and we need to teach people about these advantages. Learn this now and change your own future. Don’t and someone else will gladly take your money.
Going back to the high school presentation, the same question for you. What is learning how to invest on your own worth to you? What is the fee that you’re paying your financial advisor? 1%, 1.5%, 2%? Compound that up over 30 years. (Here’s an investment calculator to help). If I gave you $1 Million, could you learn something new? Think about your retirement planning right now, can you afford to give someone else 1% of your money for the rest of your life? Who needs your money more?
These are the principals that we need to be teaching to our younger generations, things that we never learned in school. It’s not too late for you to learn how to do this either. Call, text, email, schedule a call, hell scream at me from across the store parking lot. Do something to figure this out because your hard-earned money is at risk.
Generational Wealth Development, imagine how you can change future generations of your family by learning how to do this yourself…
Disclaimer: I do not, have not, and never will claim to be a professional writer. Please excuse any spelling and/or grammatical errors. I use 8% as an average from the S&P 500, average return is really closer to 10%. All information provided is for educational purposes only and is not intended to be investment advice. The information being provided via hyperlinks may be from third-party websites and is strictly as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. I make no representation as to the completeness or accuracy of information provided on these websites.
Also, I’m not giving you $1 Million.