2020 has been a rough year for reasons we’re all well aware of, but silver linings! Bars being closed means that for many of us, that part of our budget has been freed up. This hypothetical emoji is “Jenn” who is absolutely not inspired by one of my real life personal friends with the same name, physical likeness, and approximate drinking budget. But “Jenn” has spent way less on going out this year than in years past. And that money is getting funneled right into her Betterment account. Betterment is a “robo advisor” that picks your investments for you. What do they pick? Index funds! Why? Because they’re the best!
Anyway, Jenn’s one year of funneling booze money into index funds will turn into close to quarter million bucks a few decades down the road! Not too shabby. Small steps added up over time turn into huge results! The math on this assumes $100/week for 52 weeks, which totals $5,200. Invest that for 40 years at a 10% rate of return, you get $235K.
How do you get 10%? Well, that’s about the average return of the US stock market over the last 100 years.
As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.