As I often tell my kids, there are three things you can do with your money and only two of them will create more.
You can either spend it, invest it, or give it. Spend it on eating out, clothes, cars, and other consumables will make it disappear. Investing it or giving it will make it multiply.
And so I love that M.P. Dunleavy, the author behind Money CAN Buy Happiness, took action to invest the windfall her and her husband recently received after she realized she was blowing it each month by spending it when it came right into her bank account. She took the windfall and had it allocated right into her Fidelity investment account and added it to her Roth IRA. This is great advice for a consumer.
And it seems like a great idea, right? According to Dunleavy, her and her hubby will be $471,000 richer over their lifetime if they just keep investing the same amount they are receiving monthly from their windfall. Sounds good, right?
Until you think about this …
Between December 2007 and December 2008, retirement accounts were decimated by an average of 32% when the markets crashed (that’s over $2.8 TRILLION!). Nearly half of the money people had been stashing away their entire life, instead of investing it in themselves, was gone in a matter of minutes.
Imagine if you took that same windfall and invested it in the growth of yourself and your business. What if you invested that windfall in something that could never be taken away from you – your own education and experience? Then, it wouldn’t matter what happens in the economy, you would be on the upside.
You could turn that windfall into a revenue stream you can count on until you die, no matter what the stock market does. Sure, it’s risky. But, listen, everything is risky right now.
We are in the midst of a massive evolution and transformation. Personally, I’d rather bet on you being able to keep up with it a whole lot more effectively than the big corporations and government can.
And, listen, if you aren’t going to invest in you, who else will? Would love to hear your thoughts. Let’s discuss it in the comments below.