One day this last week while I was working on a machine at a local health club, Dr. A came rushing in and said “John, it’s all red.” He was referring to the TV screen tuned to CNBC. It was five in the morning, and the stock market had already started its epic fall. Dr. A and I discuss the stock market quite often, and a few weeks before this we had talked about the sudden rise in the market with the expected correction. Neither of us thought that it would happen this quickly and to the extent it corrected. The corona virus seemed to be the trigger.
Years ago in my freshman year in college, a professor stated in a social science class that true wealth could only be obtained by owning part of America. He told us that we had to own a business, commercial property or stocks and bonds to attain real wealth. I listened but did not understand what he was saying and forgot the message as the years went on. After starting to work at a new company, I was offered stock options and encouraged to buy them. I did and that started my interest and participation in the stock and bond markets. Today most of my retirement funding comes from that investment through dividends from stocks and municipal bonds, which are nontaxable. The suggestion that I start an investment account with a brokerage house has allowed my wife and me to accumulate the true wealth that the professor was talking about. It will be passed on to our kids, churches and charities.
So why doesn’t everybody start investing and reap the rewards given to us by our capitalistic society? One of the reasons is that our education system does not teach it. That professor is the first and only occurrence of my education mentioning investing as a way to gaining wealth. Many of my friends have invested in businesses and commercial properties, but very few have ever thought of buying stocks and bonds. My new job was plant manager at a young pharmaceutical company, and after a few years we offered our employees a 401K savings and retirement plan. The company contributed every pay period to the employee’s account and then matched their contribution up to 6%. I encouraged everyone to participate even if it was a small mount. Since many of the employees were young, they were not ready to think about retirement but—and this is a big but—a dollar invested at 20 years old could be worth $100 or more at retirement age. At 20 a car costs $4000 and at retirement the same car costs $40,000, or ten times as much. It’s called inflation and that $100 is now worth $10 in buying power. If they had waited until they were 40 to start the $100, it would be closer to $50 or $5 in buying power. It is easy to see that starting to invest in retirement at an early age gives you a great head start, and if you do the same with a regular investment account you can accumulate real wealth by the time that you retire.
Many people tell me that they do not have any money to invest, and it would be a hardship to do so. These are the people who live paycheck to paycheck with no emergency funds available. Saving something every paycheck is a habit that you have to force yourself to do. It may be $5 a week or more but it will grow into something worthwhile in the future. An ad on TV tells people to invest with their company, but at the end of the ad they say that you need $500,000 to start. That is bad advice and catering to the already rich is not what any investor should be enticed by. You can open an investment account at your local bank with much less by starting a savings account and converting it to an investment account when you have accumulated enough cash to buy your first stock. I started with a few hundred dollars and added to it and watched it grow. Many IRAs have been started this way and have had good results. I started my IRA with a CD that I turned into stock at my local bank, and the IRA that I draw on each is year is still a stock investment account that is growing in spite of the withdrawals each year. I started to own a piece of America many years ago, and everyone else can do the same. Oh, by the way the emergency or rainy day fund is taken care of with a good investment account. Using dividends for unexpected expenses does not endanger your investments and gives you a great feeling of safety. Separate accounts can be set up for your children for college or future home buying and at the same time teaching them how to invest and attain real wealth because they will not learn it in school.
Start your investment account today and join in the American Dream.
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