Personal Finance King

A Personal Finance Money Blog from a Christian Perspective

  • Home
  • About
  • Contact
  • Recommended Sites
You are here: Home / Saving Money / Hey Gen Z, You Want Guap at 80? Put Aside the Bread Now

Hey Gen Z, You Want Guap at 80? Put Aside the Bread Now

March 27, 2023 by Barnaby Leave a Comment

There are perks to being a personal finance blogger. I get positive feedback from readers. I was invited to help ring the NYSE bell on Wall Street. And you get sent free things to review occasionally. 

That’s where Wealth by Virtue by Chad Gordon came from – it showed up on my doorstep one day. 

Because I have two college-age kids at the beginning of their saving journey, I was immediately struck by his “Time Value of Money” section.

The main takeaways:

1. Start Early

Gordon gives the example of “Mary and Terry.” Mary saves $100 per month starting when they both turn 21 and earns a 10% return. Terry saves nothing in her 20s. Nine years later on their 30th birthday, Mary stops saving entirely, while Terry starts saving $100 per month with the same 10% return. When they turn 80, even though Mary hasn’t invested a penny for 50 years while Terry has been socking away $100/month the whole time, Mary STILL HAS MORE MONEY. She has $332k more than Terry. When they both turn 100, Mary has increased the difference – she is now $1M richer! 

It’s hard to fathom, but that’s the time value of money. The miracle of compound interest is the reason why super billionaire Warren Buffett made 99.7% of his money after the age of 52.  

What to do as a result of knowing this? Start investing now, no matter how old you are. Twenty-one is best, but 30 is better than 40 is better than 50. The easiest way to get started is to ask your employer to set aside 401k/403b funds before they hit your paycheck. If your employer doesn’t offer a retirement benefit, do it yourself. 

2. Your Rate of Return Matters – a Lot

Many years of investment isn’t sufficient by itself. The rate of return also really matters. 

Gordon tells the story of Benjamin Franklin, who left $9,100 to Philadelphia and Boston in 1790 when he died. Unfortunately, he also specified a conservative investment vehicle which only yielded 5%, or about 2% after accounting for inflation. By 1990, with some withdrawals along the way, the funds were worth $6.5M. If the money had been invested in the general stock market, the two cities would have each had over $12B. That’s B for billion.

He notes that a 1% difference in investment returns doesn’t sound like much, but over a lifetime, it’s huge. He gives the example of two people at 20 years of age with $100,000, one of whom earns 10% and one 9%. By the time they reach 80, the 10% earner will have $12.8M more than the 9% earner. By 100 years, the difference is $106.2M:

What to do as a result of knowing this? Pour your savings into good-yielding, low-cost investments that are relatively safe, like exchange-traded funds (ETFs) or index funds. ETFs are baskets of stocks or other securities (good yielding and relatively safe) that aren’t actively managed (low cost).

Other Thoughts on Wealth by Virtue

For a book that came free to me, it’s surprisingly well-made. It’s a hardcover, with heavy stock pages and quality printing. A great coffee table book if nothing else. But once I started to dig into it, I was equally impressed with the content. 

The only head-scratcher? The title and cover art. The bull and bear kumbaya-ing together is a beautiful – and nonsensical – image. ‘Virtue’ typically includes a moral dimension, but the only virtue Gordon calls for is some judiciousness and discipline. 

Oh, and he’s oddly optimistic about progress in extending human life: “Research is currently confirming that aging itself is not an inevitable part of being a human, but is a curable disease that will likely someday be reversed.” 

Bwahahahahahaha. But the message is solid – you’ll probably live longer than you think and should plan accordingly.

That said, this book is well worth the $32 (Amazon) investment. You’ll save (or earn) that much additional money in a short period due to what you learn, and it’s nice enough (and the info timeless enough) to file it in your personal library, and even pass it to the next generation.  

Gordon organizes all areas of personal finance planning into six areas:

  • Two “What Could Happen” areas – insurance & legal planning
  • Two “What Should Happen” areas – real estate & investments
  • Two “What Is” areas – banking & taxes 

He explains them in enough detail to make sense but intelligently enough that you don’t feel talked down to. And he does all this with enough charts and graphs to support every point, enough real-life stories to keep you interested, and enough wit to keep you chuckling every page or two.

If you live local, let me know if you want to check it out of my personal lending library. 🙂

Filed Under: Saving Money Tagged With: Chad Gordon, compound interest, Time Value of Money, Wealth By Virtue Book

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

About Me

About Barnaby King Welcome to the Personal Finance King blog, which explores issues of Money, Faith, Work, and Family. I am Barnaby King. More
Subscribe to Receive New Posts by Email:

Check your inbox or spam folder now to confirm your subscription.

RSS RSS Feed

  • Something More Valuable Than $113B And Lessons from My Daughter’s Graduation
  • Hey Gen Z, You Want Guap at 80? Put Aside the Bread Now
  • Quick Takes: Riding Greyhound, Winning Mega Millions & Human Composting

Most Popular Posts

1. How Should We Respond to Needy People on the Street?
2. We Ported Our Landline Phone to Google Voice, Saving $46 Per Month
3. What Is the Role of Faith in Personal Finance?
4. 9 Life and Finance Lessons from “Alexander Hamilton” Biography by Ron Chernow
5. Top 8 Free and Offbeat Historic Things to Do in Baltimore
6. Why We Live in Baltimore Despite Its Problems
7. How a Prized Pocket Knife Was Imperiled on a Trip to See the Rockettes
8. Is 16 Too Old for a First Phone?

Categories

  • Earning Money
  • Faith & Finance
  • Kids & Finance
  • Love & Finance
  • Misc Finance
  • Politics & Finance
  • Saving Money
  • Travel & Finance
  • Uncategorized
  • Work & Finance

Archive

  • May 2023
  • March 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • August 2022
  • June 2022
  • April 2022
  • March 2022
  • January 2022
  • December 2021
  • October 2021
  • September 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016

Copyright © 2023 · Metro Pro on Genesis Framework · WordPress · Log in