Your Wealth Reserve: How millionaires become millionaires

Millionaires have spent years saving just like us

The study found that a majority of people who have $1 million or more in investable assets do not consider themselves wealthy. In fact, only 13% of that group see themselves as being rich. But 53% of millionaires said they have a specific target amount or a rough idea of how much they need to save and invest, with 43% indicating that they have a detailed plan. Only 4% of respondents said they do not have any type of financial plan. Most juggle many financial goals, wants and needs. Almost half said they handle investment decisions by themselves. Most said “experiences are more important than possessions” so their money goal is matched to doing things not buying things. What makes millionaires different is that they put their money to work as hard as they do. And they do NOT pay others to “handle investment decisions.” That reduces their earnings. The only way to reach their money goals is to invest in a broad array of stocks and stock mutual funds at cost. They earn over 11% a year not 3.79% with a ‘managed’ account.

Use Vanguard’s Best: https://www.amazon.com/Vanguards-Top-Ten-mutual-funds/dp/150073909X

Investing books for young and old savers

John Bogle, founder of Vanguard’s low-cost mutual funds: pay less; earn more!

https://www.amazon.com/Little-Book-Common-Sense-Investing/dp/1119404509

Burton Malkiel, Princeton, indexing not stock-picking makes you rich.

https://www.amazon.com/Random-Walk-down-Wall-Street/dp/0393352242

Stanley/Danko, study of HOW real working millionaires live and earn their money.

https://www.amazon.com/Millionaire-Next-Door-Surprising-Americas/dp/1589795474

Warren Buffett, successful investor, shows you how to create financial independence.

https://www.amazon.com/Warren-Buffett-Your-Investment-Advisor/dp/1518690963

Inflation will take HALF your nest egg in retirement

Over your retirement years, your purchasing power will fall about 50% due to inflation. This is one reason an annuity offered by your advisor will not be best for you—the monthly benefit buys less every year. Your $1 million at age 65 will be worth about $500,000 by age 85. If you plan on taking 4% a year for expenses, you need to make 6+% a year. This is do-able if you invest at least HALF your bundle in stocks or stock funds. You must bust inflation wide open or your future income is in jeopardy. How can you do that safely? A little risk goes a long way. Think of it this way: part of your assets are for 2 years out, part for 10 years out and part for 15+ years out. Don’t think that all your assets will be needed at the same time. You can afford a little risk with those 15 year assets. Your bank CD/money market works for 1 year but won’t cut it for later. For later, a balanced fund is best. A long-term winner is the low-cost (0.23%) Wellesley Income Fund. Its allocation of 60% bonds/40% stocks and has provided nearly 10% a year since 1970. Plan 2 year, 10 year and 15+ buckets. Use buckets in the same fund family.

Kill inflation: https://www.amazon.com/What-your-RMD-much-spend/dp/1718946716

Why does stock-picking and market-timing NOT work for us?

If you watch or read about Wall Street titans, you might think that you need an advisor to help you grow your investments. NOT TRUE. Fidelity found that their client accounts that were most successful were those put on automatic--left alone--forgotten. Our greatest investor Warren Buffett said, "The stock market is a device for transferring money from the impatient to the patient." Buffett claims that his holding period is forever. He advocates compounding (allow earnings on earnings to grow exponentially): "My wealth has come from a combination of living in America, some lucky genes, and compound interest." Indeed, he has owned many companies and stocks for a long time: GEICO, Coke, and American Express. He uses the earnings to buy companies. His strategy works because his money does NOT trade, rebalance, market time, buy high-sell low or sector rotate—it compounds: money earning money automatically. Keep advisors away.

Use the Best Robo: https://www.amazon.com/Best-Robo-Advisor-Ultimate-Automatic-Management/dp/1537111957

How much of your 401k money goes to other people?

Many working people think that their retirement plan at work is free because fees are not shown in their statements. This is another Wall Street trick. It is your money but the people your boss hires to manage it take a large share. There is your plan administrator, the person who sold it to your boss and the mutual fund that invests the money. Now Fidelity admits there are ‘secret’ fees too. All told, you could be paying over 2% of your 9% earnings to Wall Street and your boss. Over your working life, the costs can take up to 63% of your possible accumulation. So instead of you retiring with $1.1 million, you receive only $660,000. You can avoid giving away $510,000 by using your 401k only if you receive a match and only if you have a low-cost stock plan option. Many savers have stopped using their 401k and set up automatic investing with a low-cost mutual firm like Vanguard, Schwab, TD Ameritrade using an IRA or Tax-FREE Roth IRA. These trusts protect your accumulations and save you having to move your 401k when jobs change and in retirement. The trustee debits your checking and invests your contributions like a 401k. However, you earn the full 8-11% in a stock fund costing as little as 0.04%. It’s your money and you take all the risks.

Keep more of your earnings: https://www.amazon.com/Pimps-Wall-Street-money-middlemen/dp/151525254X

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How Govt wastes our money: Congress spends another Trillion we don’t have!

GOP goes after 40 M poor and hungry to save money instead of Trump’s new plane.

War machine gets raise: $738 B up from $611 B. 165,000 military guarding others.

GOP endorses deficit spending and tax giveaways to the wealthy: Cut food stamps!

Trump’s mob will start killing people they don’t like. Feds have not killed since ’03.

CA raises air quality despite Trump—reduces auto emissions.

SCAMS/SPINS:

Most brokerage firms overcharged our charitable and retirement accounts.

Swapnil Rege caught overcharging $600,000 for investments: barred for 3 years.

Charles Kenahan, 30 yr broker caught excessive unsuitable trades: $40 million fine