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David Bach..Millionaire

Old 07-12-06, 12:00 PM
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David Bach..Millionaire

Had an appointment for some investing options today at the bank and they gave me a copy of "The Automatic Millionare...A powerful one-step plan to live and finish rich" by David Bach.

Only read the first little bit of it so far but seems pretty interesting. I don't expect to be rich overnight but I would like something when I am ready to retire in ~30 years.

Are these books worth reading or a waste of paper?
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Old 07-12-06, 12:31 PM
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30 years. Let me show you how easy it would be in that time frame:

Initial investment: $10,000
Yearly contributions: $7500
YEars to grow: 30
Interest: 8% (average rate of growth of the s&p for the past 30 years)

Total: $1 million.
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Old 07-12-06, 12:40 PM
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But in 30 years, 1 million dollars will most likely not be enough to retire on and live in the United States.

Shoot for 5 million maybe?
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Old 07-12-06, 01:00 PM
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More like one BILLION dollars!
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Old 07-12-06, 01:19 PM
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Originally Posted by 4KRG
But in 30 years, 1 million dollars will most likely not be enough to retire on and live in the United States.

Shoot for 5 million maybe?
That's a little high. It's closer to $2.5, barring massive inflation.

But it's not the amount that's the key. A smart retiree will save enough to live on the interest. The $1M number comes from the fact that even with minimal effort, one can reap at least 5% interest yearly on $1M and live on $50K a year, plus SS (usually $20K). That's $70K without touching principal.
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Old 07-12-06, 01:26 PM
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Here is my plan to build wealth:

1a. Win Lottery
1b. Marry Rich
....................
3. Retire

-p
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Old 07-12-06, 01:42 PM
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Originally Posted by DVD Josh
30 years. Let me show you how easy it would be in that time frame:

Initial investment: $10,000
Yearly contributions: $7500
YEars to grow: 30
Interest: 8% (average rate of growth of the s&p for the past 30 years)

Total: $1 million.
That's $625 out of your monthly income every month. Yowza.
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Old 07-12-06, 01:45 PM
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It is <$160/wk....which isn't too bad.

-p
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Old 07-12-06, 01:50 PM
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Originally Posted by DVD Polizei
That's $625 out of your monthly income every month. Yowza.
$150 a week (roughly). A day's pay for most middle-class Americans.
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Old 07-12-06, 01:52 PM
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Originally Posted by DVD Polizei
That's $625 out of your monthly income every month. Yowza.
Cut out Starbucks, and eating out for lunch everyday (save on gas + food bill) and a person gets closer to that $625.

Heck, I know a guy whose bar tab is $400 a month.

I've tried to talk to him, but...
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Old 07-12-06, 04:03 PM
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Originally Posted by DVD Polizei
That's $625 out of your monthly income every month. Yowza.
If you have a company that matches 401 k contributions, then it really isn't that bad. The money you put in is not taxed, and if you have a company match some percentage of what you put it, it's even easier. I use to have a 6% full match, then over the years it has dwindled down to 2% or 3%, I forget now exactly how crappy it is.


I still argue you need more than 1 million to retire in the US and not live in constant worry over money. I think 2.5 million might be a better guess and my 5 million may be a little high, but I know a guy that had retired thinking 1 million was enough and ended up going back to work at age 70.
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Old 07-12-06, 04:45 PM
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Originally Posted by 4KRG
If you have a company that matches 401 k contributions, then it really isn't that bad. The money you put in is not taxed, and if you have a company match some percentage of what you put it, it's even easier. I use to have a 6% full match, then over the years it has dwindled down to 2% or 3%, I forget now exactly how crappy it is.


I still argue you need more than 1 million to retire in the US and not live in constant worry over money. I think 2.5 million might be a better guess and my 5 million may be a little high, but I know a guy that had retired thinking 1 million was enough and ended up going back to work at age 70.
$1M is more than enough. As I stated above, even investing in short-term bonds (but today a MM or CD will do) with a $1M principal will yeild, at a minimum, $50K in interest yearly. Tack on SS and you are looking at $70K.

And this without touching your principal.

Now if you can't live on $70K then there are other issues besides income that you have to worry about. But for a reasonably prudent person, $70K should take care of everything a person needs.
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Old 07-12-06, 07:48 PM
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It's easier said then done. I pay out $1200 in bills every month and I barely make that much.
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Old 07-12-06, 08:12 PM
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Originally Posted by DVD Polizei
That's $625 out of your monthly income every month. Yowza.
Exactly. If it were that easy to do, we'd have a lot more millionaires. Ever wonder why there aren't that many (relative to the population at large)?

That being said, while it might represent 20% of your salary (1 day's pay out of 5), your salary will go up over time, whereas this calculation represents a static investment of $625 per month.

If your salary doubles, then the monthly amount saved then goes down to 10% of your salary.

Simple thing is, it's not the amount that matters, it the accumulation over time and the earlier payments are better than the later payments.

DVD Josh's example gets you $1M over 30 years with $625 per month.

But - if you were to change it slightly and pay DOUBLE your initial investment and double your monthly savings for the first 6 years and then NEVER pay anything into it again, you'd have your $1M. You haven't saved anywhere near as much over the 30 years ($235K invested versus $110K invested) but end up with around the same amount after 30 years.

Save early as you can and as much as you can in those early years. It's hard, but it does pay off in the end.

Compounding is magic. As Einstein is rumoured to have quoted: “The most powerful force in the universe is compound interest”.
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Old 07-12-06, 08:24 PM
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Originally Posted by ElementZ
It's easier said then done. I pay out $1200 in bills every month and I barely make that much.
over $2500 for the wife and me
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Old 07-12-06, 08:36 PM
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Originally Posted by tommyp007
over $2500 for the wife and me
Yea but do you only make $2700 per month.

I pay out $1200 and I only take home $1400.

Anyways, the main point they come across in this book is to PAY YOURSELF FIRST. It sounds easy enough.
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Old 07-12-06, 08:53 PM
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Curious ElementZ: Did they give the book to you with no expectation in return, or as part of a deal? Seems like it's a good deal if nothing else.

Edit: Checked and the guy seems to be very into MLMs, so I would read it keeping in mind he may have an agenda.
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Old 07-12-06, 11:30 PM
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I've read part of the book but haven't finished it. Sounded interesting.
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Old 07-13-06, 12:04 AM
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Multiple Stream of Income = Good
Multi Level Marketing = Bad

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Old 07-13-06, 04:21 AM
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Haven't seen any MLM themes in the book yet. Seems that it's mostly saying, 1) Pay Yourself First, 2) Do not use credit, 3) Own a home instead of renting, 4) Cut out the "Latte Factor" in your life.

I am about halfway thru.
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Old 07-13-06, 07:05 AM
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If most people here eliminated their home theaters they could probably save upwards of 20k?
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Old 07-13-06, 07:16 AM
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Most books like that usually are usually just filled with common sense notions regarding spending habits and saving money. It's just a matter of whether or not you can apply it. I had a friend who worked a good job after college and made easily $30,000k after taxes. Still, he had over $50,000 in credit card debt after one year. He didn't save any of his money - he was always struggling by the time the next paycheck came out. He was always eating out, he drove an expensive car, etc etc. He even lived at home though, and his parents were good enough not to make him pay rent.

I guess the "Latte Factor" is expensive spending habits that don't SEEM expensive at the time but can add up to be expensive over time, especially by the end of the month. Even small additions to bills can kill you - I eliminated many options on my cell phone just to make the bill load easier at the end of the month. Cutting things out like that can really save you a bundle. When I go out to eat now I rarely if ever order a soda, even if i'm at a fast food joint. Being more financially dependent at this point in my life, I see things not as "$5 today" but rather "$1200 at the end of the year".

Last edited by Superboy; 07-13-06 at 07:20 AM.
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Old 07-13-06, 03:53 PM
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I pointed out to my girlfriend that she spends $3.50 a day on cofee and a muffin at Tim Hortons.

That is $25/week, $100/month, $1200/year

Not to mention other little things like bottled water for $2 when you can turn the tap on for free
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Old 07-13-06, 04:41 PM
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Originally Posted by pedagogue
Here is my plan to build wealth:

1a. Win Lottery
1b. Marry Richard
....................
3. Retire

-p
I knew it! I knew it!
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Old 07-14-06, 10:14 AM
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Worth a read

http://articles.moneycentral.msn.com...etirement.aspx
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