Sunday, September 27, 2015

Why not 12%? Why not YOU? Why not NOW?

I recently had some interesting information revealed to me that I just had to share it with you!

(Drum roll please.) Well here it goes: If you take the amount you are investing on a monthly basis, assuming a 12% rate of return (not 11% and not 13%), your result in 20 years (not 19 years and not 21 years) would approximately be the monthly amount you were investing plus three zeroes added to the end. So, that means, for example, if you were to invest $1,000 per month working at 12%, in 20 years you would have $1 million! Isn't that awesome? I think it is because I strongly believe that everyone should at least have a 20 year game plan for becoming a millionaire. If you don't have one yet, then you can take this one.

But, you are probably wondering, how can I get 12%? 12% is impossible! On the contrary, I believe 12% is very possible over the long term. However, don't take my word for it, take financial guru, Dave Ramsey's word for it! I love how he puts it in his book The Total Money Makeover: A Proven Plan for Financial Fitness:

"There are several people in our country today who are ignorant on the returns offered by investing well. Ignorance is not lack of intelligence; it is simply 'not knowing.' Sadly, many intelligent but ignorant people seem to think that making a 12 percent rate of return on their money in a long-term investment is impossible."

"I recommend good growth-stock mutual funds in this book as a long-term investment and dare to state that you should make 12 percent on your money over time. The supporting data for that bold statement can be found by looking at the historical averages of the Standard & Poor's 500 index. Widely regarded as the best single gauge of the US equities market, the S&P 500 is an index with five hundred of the largest companies in leading industries of the US economy. The S&P 500 has averaged 11.69 percent per year for the last eighty-plus years, as of this writing [2013]. This includes some pretty significant recession periods."

"Does that mean you can expect to see 12 percent growth every year? Of course not. That's not how this thing works. The market goes up and down all of the time, and sometimes it's a pretty wild ride. Just looking back over the past few years as of this writing [2013], it looks like a roller coaster. In 2009, the market's annual return was 26.46 percent. In 2010, it was 8 percent. In 2011, it was actually down for the year at -1.12 percent. But true long-term investors don't worry too much about the year-to-year returns. They look at the history over the long haul, knowing that some years it'll be up, and some years it'll be down."

"Most experts and anyone who has had even one finance class agree that the S&P 500 is a great statistical measure of stock market returns. This is such a standard, or bellwether, that virtually every stock fund will show you its returns in comparison to the S&P 500. And again, the life-time average of the S&P 500 is just under 12 percent."

"Any decent broker with the heart of a teacher can, in his or her sleep, lead you to funds with long track records averaging over 12 percent. So don't let anyone tell you that you can't predict a 12 percent rate when you are considering investments for ten years or longer."

So, with that in mind, here are some questions that you may want to ponder: Why not 12%? Why not YOU? And if you haven't already started on your 20-year game plan, Why not NOW?

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any comments, please post them below, otherwise, feel free to contact me.
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