I have been thinking deeply about leaving a legacy when my ‘time’ comes. Not that I am sickly or anything. I am still young(ish) after all. Having a new small child will inherently cause you to think about such a subject.
While I am focused on my career and working on financial goals, I began thinking about my young child and my teenager.
With what I have learned about wealth building, is that having cash on hand, or making boat loads of money with a high salary, isnt what builds wealth. Time, is the greatest factor. Time, is the best friend of investing. Time is the greatest gift. They say that making faithful investments, on regular intervals without breaking stride and being blessed with long life, is all you need. Let me give you an example:
Say you never make a large salary. You work in a career that you love and you make just enough to live a comfortable life. This could be making $29,000 a year or even less. Let us assume you began this job when you were 20 years old and you never got an increase in pay. You got paid every two weeks, which seems to be the standard. Lets just assume as well, you invest into an S&P 500 Market Index fund adding$50 every paycheck, no more, no less. You simply ride the market putting in that $50 every paycheck. The S&P 500 averages 10% since its inception, but for argumentative sake, lets assume a 9.5% return. When ready to retire at 65 years old, you have $1,160,853.00
Let’s say now that we as parents start making our children work around the house and pay them for their chores. Not just developing them as little humans, but teaching them the value of money, teaching them to use money as a tool and not simply living paycheck to paycheck. We pay them enough let’s say we match them dollar for dollar and we invest on their behalf the same $50 every paycheck starting when they can do real chores around the house, lets say age 7. (Im not a monster.) So giving them just an extra 13 years ahead of my first example would provide them a retirement portfolio valued at roughly 4.8 Million!
I’ll go one step further here. What if we started a retirement account for our newborn. And we as parents placed in the same $50 every check for them. Let’s also assume that as they aged, they continued to put away their $50 every check after they became adults and we no longer contributed. They will have roughly 8 Million dollars when they retire.
Now I understand. Its their responsibility to do this o their own, and yada yada, but what a gift, it would be. What a legacy you could leave knowing this. What a difference you could make. You could change the future opportunities or more accurately, the ease of opportunities your bloodline has. You would essentially be planting the seeds.
What if you did this for your children, and grandchildren and great-grandchildren. You have just changed your entire family tree!!
“Who cares about what grandma and grandpa left us in the will- They left us open to work for what we love. To never worry in retirement. They gave us the opportunity to retire when we were in our late 30’s if we so desired.”
Let’s say your well off and you did this for your grandchild. You are well off enough, you simply invest for her/him $250 every month. (Remember you love them) . When this grandchild of your retires, they will have 50+ Million dollars.
Now I know money isn’t everything, and I honestly don’t think people would take things to this level. Plus if I had millions at 40 I probably wouldn’t be slaving away full of stress and worry either. But you have provided the opportunity. You see, not everyon gets to take advantage of the same opportunities. But you and your family have the ability to create that opportunity not only for yourself but your children, and their children and their children’s children. Stop thinking of just yourself! Think long and hard about the opportunities you can create for the next generation of your family with small continuous contributions. $50 a month.
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