It’s not fiction, honest!
There is a plan out there that if you’re ancestors had invested just $1.00 when it was first published you would not only be the richest person in the world you would have more money than currently exists on the planet! That’s $539 with 65 zeros behind it!
Put in more practical terms $10,000 invested in this plan today will be worth $640,000 in just 50 years. Pretty good right? I bet you are wondering what I am talking about and how to get in.
1,800 years ago a group of rabbi’s writing in the Talmud advised the Jewish people to put a third of their money in land, a third in commerce and keep a third in hand. In today’s vernacular that’s what we call an asset allocation strategy that would be one third real estate, one third equities and one third cash or fixed income.
When I first heard about this ancient advice I did a little digging and looked up some historical numbers. Whenever a financial planner suggests a particular fund for you to invest in you need to look at the track record. Most advisors will want you to look at a 5-10 year track record but the more data you can find the better. One advisor who uses this strategy with most of his high net worth clients, John Nicola of Nicola Wealth Management in Vancouver B.C. has historical data dating back to 1990. What it shows is an average return for the past 24 years of 9%. With a little more digging I determined that this particular strategy has been consistently returning an average of right around 9% for over a hundred years.
We in the financial planning world are all familiar with the rule of 72. Simply put, divide any given interest rate into 72 and you will know roughly how long it takes for an investment to double, in this case money invested at 9% doubles every 8 years. Therefore, over 50 years you will see your investment double about 6 times.
Granted, most people don’t have a 50 year time horizon so what if you only have 30 years and can only afford $200 per month? That get’s you $191,000. Add 10 more years to the horizon, and see your money grow to $370,000. Not bad considering that you will probably get a raise or two over that time horizon as well and be able to increase your monthly contributions along the way.
This point here is two-fold.
#1 – In this age of low interest rates and high volatility it is still relatively easy and conservative to achieve a 9% or even 10% return.
#2 – Invest early and often, the more time you have the better.
There’s a third point here too…
#3 – Don’t dismiss the wisdom of the ancients, their advice has survived for thousands of years for a reason. Just because you weren’t around 1,800 years ago to get in on the ground floor doesn’t mean you shouldn’t start now.
For more information on The Meekonomics Project and how to live debt free, build wealth and leave a legacy, in other words how to inherit the earth write to: firstname.lastname@example.org