Quite right... The more I have put away the less I want to spend. I used to crave the latest iPhone or whatever. Now I know I can go and buy anything like that tomorrow with no consequence, I don't want to do it. It's more than enough to know that I can buy it if I want to but choose not to. That is quite liberating.
When my daughter was a baby we had a next door neighbor, Jack, who was in his 70’s and was a multimillionaire. He lived in the same nice, but smallish home he had owned for years, and had worked his entire life in a very ordinary job that didn’t require a college education, which he didn’t have. He had become a multimillionaire by putting $10 a week away when he got his first job after finishing his military service at 19. And he never varied that process. Every week, like clockwork, $10. The miracle of compounding.
Hi Neil...I have followed your adventures since the "Greek" incident etc. You are a valuable source of information and yes I am learning from your experiences. So ,Thanks sincerely for your videos on retirement and investing. I admire that you can tolerate the trolls..I am like Sara - it would upset me deeply and put me off. Keep up the good work. Greetings from Manchester. In a few days we will be in Spain too :)
My Uncle used to always say that the first million was the hardest. When I was young, that number was demoralizing. I like the 100k number that you’re using better. Solid facts here - great video.
Couldn’t agree more, when your pension fund is £100k and you have a great year of growth at 10% you make 10k. A not insubstantial sum. But when that fund gets to 800k, that 10% is now making you 80k. Then have another good year, that 10% is now £88k, whereas if you are still at £110k with your good year, you make £11k. It ‘explodes’ exponentially.
Compounding really is essential but starting before the age of 25 is too to give it that time because the rule of 72 won’t be exact and precise due to returns on the investments but over the longer term, it does, nice series of videos that I’ve started watching, great to share awareness and help others so thank you.
Surly you can't afford to retire unless you've got at least 400k you two must have more than this to be doing what you're doing at the moment. I'm 58 & envy you two but I'm struggling to know how much is enough.
It's monopoly money to most people. We work hard but cannot save as don't earn enough. We will be working until we can get the state pension. Divorce, illness and bereavement have made sure of this.
@@DeniseParker-vh7meMaybe, but no one forces people to get married. Statistics tell us that a marriage probably won't be a happy one, yet all the sheep still take the risk. Newsflash - you don't have to. If it ends in divorce then it was their choice to take the risk.
Here’s the thing. If I have $100K invested in stocks only (ETF or fund or my own pics or whatever) - and I wait a year - then after that year, let’s say the fund goes up to 108K as you say. I don’t realize that 8K gain unless I sell. So, when you talk about “compounding” as it relates to stocks - I disagree. Because in the next year, that 108K could go down to say 99K. What is my advantage of “starting off” year 2 with 108k? Nothing. Now for individual Bonds, it’s different. I can take that 100K and get a bond at 5% and at the end of the year, I get 105K. Then I can invest that bond at another 5% and get 110.25K and so on - I can actually SEE the compounding happening. I really think it’s weird that the growth of equity is referred to as “compounding”. What are your thoughts on this?
Growth of equity is not linear. The returns are more lumpy. You could see no growth or negative growth for a whole year and then in the following year you could see in the space of 2 or 3 months a 25% return bringing growth back to the mean growth rate. The S&P 500 is a classic example where this happens. It’s something like 10 trading days in a year that produces returns. Hence the saying time in the market beats timing the market. Equity’s over the long term beats bonds.
Please note that my real issue is calling equity growth "compounding". I understand that it is a lumpy road to gains, but that is the exact reason why I find it weird that it is called compounding (when talking about equity growth).
So a 1m will make 80k a year so this means you can have 80k income a year and your 1m never goes down!!! But they keep telling us about 4% rule which of course it is just wrong and nonsense
If you take 8% income you can but over 20 years the value of your million will have been beaten away by inflation, so you take 4% and reinvest 4% to keep the million growing.
@@BoninBrighton You don't need to grow your 1m after you retire you need to spend! Also inflation shouldn't be running at 4% but most likely to be around 2.5% going forward.
@@porschecarreras992cabriole8 I don’t need to spend though …. I need secure income. And yes inflation was higher this past year so 4% re invested isn’t a bad plan at all.
Investment returns are not a straight line up and to the right, the 4% and similar rules are borne from the need to withstand the stock market's volatility and never run out of cash. There's a good chance during your long retirement (40 years in this guys case in all possibility) that invested funds in the market will drop by 40% one day.
@@PaulB-q3d Well he did say that the average long term for S&P500 is 8%. As this is the average this is what I use the average. You will have years that it will go up by 20% and others it goes down by 20% but as you are on drawdown and your money in always invested I use the average of 8%. I do aim to retire close to the million so based on this I should be able to take 80k a year and my principal should stay around the million mark almost indefinitely.
Quite right... The more I have put away the less I want to spend. I used to crave the latest iPhone or whatever. Now I know I can go and buy anything like that tomorrow with no consequence, I don't want to do it. It's more than enough to know that I can buy it if I want to but choose not to. That is quite liberating.
It's a wonderful feeling too eh. Thanks for getting involved.
Me too
When my daughter was a baby we had a next door neighbor, Jack, who was in his 70’s and was a multimillionaire. He lived in the same nice, but smallish home he had owned for years, and had worked his entire life in a very ordinary job that didn’t require a college education, which he didn’t have. He had become a multimillionaire by putting $10 a week away when he got his first job after finishing his military service at 19. And he never varied that process. Every week, like clockwork, $10. The miracle of compounding.
That's brilliant Dorothy.
Hi Neil...I have followed your adventures since the "Greek" incident etc. You are a valuable source of information and yes I am learning from your experiences. So ,Thanks sincerely for your videos on retirement and investing. I admire that you can tolerate the trolls..I am like Sara - it would upset me deeply and put me off. Keep up the good work. Greetings from Manchester. In a few days we will be in Spain too :)
My Uncle used to always say that the first million was the hardest. When I was young, that number was demoralizing. I like the 100k number that you’re using better. Solid facts here - great video.
Thanks for your insight as ever. Appreciate it.
Always enjoy your content.........great stuff
Couldn’t agree more, when your pension fund is £100k and you have a great year of growth at 10% you make 10k. A not insubstantial sum. But when that fund gets to 800k, that 10% is now making you 80k. Then have another good year, that 10% is now £88k, whereas if you are still at £110k with your good year, you make £11k. It ‘explodes’ exponentially.
Thankyou great video 🎉
Compounding really is essential but starting before the age of 25 is too to give it that time because the rule of 72 won’t be exact and precise due to returns on the investments but over the longer term, it does, nice series of videos that I’ve started watching, great to share awareness and help others so thank you.
Thanks for explaining the rule of 72. I just told my husband about it.
Glad it was helpful!
Love this shorter format video 👌 rule of 72 is useful knowledge 👍
Surly you can't afford to retire unless you've got at least 400k you two must have more than this to be doing what you're doing at the moment. I'm 58 & envy you two but I'm struggling to know how much is enough.
It's monopoly money to most people. We work hard but cannot save as don't earn enough. We will be working until we can get the state pension. Divorce, illness and bereavement have made sure of this.
@@DeniseParker-vh7meMaybe, but no one forces people to get married. Statistics tell us that a marriage probably won't be a happy one, yet all the sheep still take the risk. Newsflash - you don't have to. If it ends in divorce then it was their choice to take the risk.
But there's two of them so that's 200k each. Still an amount but more do-able?
@@ivanbeacon5883 they sold their main property … a huge risk to my mind.
great video on compounding, really cheers me up to hear. And you keep teasing what you will share in 3 videos time!!! cant wait.
Would 100k be your own personal wealth, or does that include pensions and shares, or should I mind my own business, lol?
Here’s the thing. If I have $100K invested in stocks only (ETF or fund or my own pics or whatever) - and I wait a year - then after that year, let’s say the fund goes up to 108K as you say. I don’t realize that 8K gain unless I sell. So, when you talk about “compounding” as it relates to stocks - I disagree. Because in the next year, that 108K could go down to say 99K. What is my advantage of “starting off” year 2 with 108k? Nothing. Now for individual Bonds, it’s different. I can take that 100K and get a bond at 5% and at the end of the year, I get 105K. Then I can invest that bond at another 5% and get 110.25K and so on - I can actually SEE the compounding happening. I really think it’s weird that the growth of equity is referred to as “compounding”. What are your thoughts on this?
Growth of equity is not linear. The returns are more lumpy. You could see no growth or negative growth for a whole year and then in the following year you could see in the space of 2 or 3 months a 25% return bringing growth back to the mean growth rate. The S&P 500 is a classic example where this happens. It’s something like 10 trading days in a year that produces returns. Hence the saying time in the market beats timing the market.
Equity’s over the long term beats bonds.
5% bond returns are negative when you take inflation and monetary debasement into account.
Bonds also fall in price. Money market funds don’t keep up with inflation neither does cash. Choose your poison.
Please note that my real issue is calling equity growth "compounding". I understand that it is a lumpy road to gains, but that is the exact reason why I find it weird that it is called compounding (when talking about equity growth).
You take 8% in dividends NOT by selling the shares though….but far better to reinvest 4% and only take 4% as income.
So a 1m will make 80k a year so this means you can have 80k income a year and your 1m never goes down!!! But they keep telling us about 4% rule which of course it is just wrong and nonsense
If you take 8% income you can but over 20 years the value of your million will have been beaten away by inflation, so you take 4% and reinvest 4% to keep the million growing.
@@BoninBrighton You don't need to grow your 1m after you retire you need to spend! Also inflation shouldn't be running at 4% but most likely to be around 2.5% going forward.
@@porschecarreras992cabriole8 I don’t need to spend though …. I need secure income. And yes inflation was higher this past year so 4% re invested isn’t a bad plan at all.
Investment returns are not a straight line up and to the right, the 4% and similar rules are borne from the need to withstand the stock market's volatility and never run out of cash. There's a good chance during your long retirement (40 years in this guys case in all possibility) that invested funds in the market will drop by 40% one day.
@@PaulB-q3d Well he did say that the average long term for S&P500 is 8%. As this is the average this is what I use the average. You will have years that it will go up by 20% and others it goes down by 20% but as you are on drawdown and your money in always invested I use the average of 8%. I do aim to retire close to the million so based on this I should be able to take 80k a year and my principal should stay around the million mark almost indefinitely.