Start Early, Start Today
Lesson 2 from: FAST CLASS: How to Retire Early: The Latte FactorDavid Bach
Start Early, Start Today
Lesson 2 from: FAST CLASS: How to Retire Early: The Latte FactorDavid Bach
Lessons
Financial Education - Know Better To Do Better
15:12 2Start Early, Start Today
07:02 3The Latte Factor: How It Works
16:31 4FITE - Financial Independence to Transition Early
04:39 5Common Investment Mistakes
01:29 6Becoming Rich on an Ordinary Income
04:04 7How Much do You Need to Retire
01:47 8Retirement Plans & Where to Start
05:23Lesson Info
Start Early, Start Today
this is what happened to me that changed my life. I saw a chart. I saw a chart that's in the book, the latte factor. And this chart was handed to me. Yeah. In training to be a financial advisor. So in I worked in the World Trade Center. That's where the training glass was. I worked at Dean witter Reynolds which became morgan Stanley. And I lived in new york city and as a part of training financial virus who have been successful come through and they share their wisdom. So this gentleman came through and he said, and he basically spoke for an hour and he said, now here's the thing all of you in this room, all of you young kids. He said, I know you're not gonna remember anything I just said, but I want you to remember this. He said, I want you to take the chart out that I handed to you on this chart. He said, notice that if you were to save $2,000 a year and you started at 19, If you were to save $2,000 a year starting at 19 and never put another just save until 26. Never put another do...
llar away in an IRA account. And that's the reason is 2000 is that's what the IRA tax rules were in 1993. And you just left never put another dog. We just left it alone At 65. You could have over $1,035,000. He said, now is anybody in the room 19? Nobody in Rose 19. He said, How many of you in the room are 26. A lot of us were a lot of young guys in this room. I was 26. It was actually 27, 26, 26. He said, If you go and save $2,000 And you do this every year until 65, You're also going to do very well. You're going to $883,000. Still a lot of money. It's very interesting though. Do you notice that this person doesn't catch up? This person saves every single year and doesn't catch this person? This, by the way, I'm gonna get off camera for a second. This is the chart that my son who's 15 looked and said, wait dad, I'm not 19, I'm 15. You need a new chart. But yeah, actually that chart is in one of my other books. You need a new chart that shows 15. But he's like, so I'll have what what will I have? My you'll actually have over two million. So he took his calculator out, he goes $2,000 a year, his $5.41. That actually is the price of a cup of coffee. That actually is the latte factor. So I'm 27, I'm like, I have to at least. So he says, at a bare minimum guys and some gals, you need to open up an IRA account and put at least $2000 a year away Because you'll get to 65 and you'll have some financial security and he said, look, you're gonna make a ton of money being a financial market. That's why you're all here. There's no reason for you to save $2,000 here. You should be saving 10 times this ultimate. Ultimately you should have millions of dollars by the time your retirement. This was the 2nd chart. Similar ideas showing you what happens when you start early or when you wait. So this chart Shows them out. Takes $300 a month. That's how much a day. By the way, $10. Most people can save $10 a day. Would you agree? How many of you agree that most people can say most people, not everybody, most people would save $10 a day. Yes. Okay. 25 At 65 with 10% rate of return, it's $1,913,000. That's like, wow. Now wait till you're 35 In $684,000. Wait until you're 45, It's $230,000. Wait until you're 55, It's $62,000. Here's how the real world works for a lot of people, not everybody, but for a lot of people At 25, most people, 25 are not thinking about money At 35, they're hearing about money. 45, they're worrying about money and at 55, they're hyperventilating and when you look at these charts, you know why? Because too many people start to get serious about their personal finances down here. The beauty of money is, it doesn't know you, it doesn't know what sex you are. It doesn't know what color you are. It doesn't know who your mother was. Doesn't know who your father was. Doesn't know where you live. Money doesn't care. It's math. Money is math and the beauty of math to make you rich. It's basic math. If you can do basic math, like what? 10% of a dollar. It's a dime. That kind of basic math. That's all you need to know to be wealthy. I'm gonna explain that. But compound interest is just basic math. This is another chart in the back of the book. Now the whole books of story. But this chat, this is a chart in the back of the book again, just showing basic math $5 a day, $10 a day. $20 a day. $30 a day. I'm gonna teach you this thing called the 50 20 Formula 50 20 Formulas. For people who want to retire early. You want to retire early in 20 years. $50 a day in 20 years Had a 10% rate of return, which is what the stock market is average since 1926. So if you bought an index fund and left it alone And we get the same rate of return since 1926, $50 a day In 20 years is $1,139,000. $50 a day in 30 years is 3,390,000 and 40 years. It's $9,486,000. You just pick your number and go through these charts. And later I'm gonna give you other rates of return Because it doesn't have to you don't have to have a 10% rate of return. You definitely have to save 10 savings is the rate that matters the most is your savings, right? How much money you're keeping?