This Economy is Effecting More Than The Pocket Book

This economy has got everyone in a slump. There are people in denial who continue living their lives as if nothing is wrong. Then there are people who act as if we are seeing the end of the world. That's not happening yet.

Everyday in the news the stock market continues to go down. Why? For far too many years credit has been too available without regard to whether anyone could afford it. Also, companies have cooked the books, falsifying their bottom line, which helped fuel a buy, buy, buy in stocks. Remember Enron? They cooked the books! Madoff got away with it for decades. And there are certainly more out there. Where there is one rat, there are more. It happened because no one was paying attention or willing do anything about it because they too made a lot of money, lots of it, and as long as they made money, they didn't care too much.

Now people are seeing huge losses and its effecting them in more ways than just in their pocket books, bank account or investments. There is a serious increase in depression, an emotional slump. People are down right depressed. The fortune they were counting on in their retirement is now gone. Some of it is because they got greedy, like in the cartoons, they only saw dollar signs. Instead of being diversified with their money spread around, they were looking at more than doubling their money in fewer investments.

The depression that people are feeling due to their losses in their investment is real, but few are doing much about it. People are resorting to gambling in hopes of making up what they lost, only to lose even more. While others are drinking more, maybe even straight from the bottle as their escape. What people could do instead is, get involved to change policy to stop this sort of investment fraud from happening in the future. It would be proactive, positive and depression relieving. But far too many people would rather drown their sorrows than do anything. It would mean they would have to accept some responsibility.

It is truly a sad state of affairs and it looks like no one is going to do much about it.

In my recently published book, Recession Survival Guide, I give people not only some background into what help bring us to this point but also what anyone can do to help themselves. It sells for $19.95 and can be downloaded immediately. Along with the book I am giving away the following: 3 files demonstrating the power of compound interest, budget workbook, The Money Changers which explains banking industry, and a recipe booklet.

Building Wealth Slowly: Using the power of compound interest to build wealth

Many people think it is hard to become wealthy. It all depends on how you define it, doesn't it? If you think of wealth as having loads of money, in the millions, then yes, it may be hard to become wealthy for you. If on the other hand you think of wealth as having enough money to pay the bills and your money is invested wisely, and in a diverse manner, so that it makes you more money, then the answer is, no, it is not hard to be wealthy.


Assume you are just out of college, have a job with an income that allows you to pay your bills with a little left over. If you were to put a $150 a month into an IRA that grows at 8% a year, you will have about $605,000 at age 65. A 10% a year return on compound growth is about what you should expect if the money were invested in a no-load S&P 500 Index Fund. To some that may seem like a lot, but it really isn't, remember inflation eats away at any investment at a rate of 3 to 4% a year, as do mutual fund fees.


In the example above, for about $35 a week or $5.00 a day you would be on your way to being a millionaire. If you chose to live a little more frugal, you could easily save between $8.00 to $10.00 a day, or $56 to $70 a week. Saving $8 a day will result in $953,555 by age 65, and at $10 a day results in an investment growing to $1.19 million.


A simple example, if you deposited $100,000, OK many of us may not have that kind of money at the moment – it's just an example, and you left it alone for 10 years, here is what it would be worth if it earned 3%: $135,000. Not bad, not bad, considering you didn't do anything to earn $35,000. But, lets say you earned 9.05% interest, it would be worth $245,000, a full $110,000 more than at 3%. That's the power of compound interest and time. If you invest for the long-term in a higher paying investment account, you can more than double your money.


If on the other hand you contributed the full amount of $5,000 a year to a retirement account you would have $1.48 million. That's only about $14.00 a day and you could have a small fortune. If you decided to live without some expenses: using credit cards, extravagances, daily lattes, bought used cars instead of new, and invested your pocket change (about $30 a month) you could actually save well over $2 million before retirement.


Just remember, always invest your money diversely: stocks, mutual funds, high yield savings accounts, CD's, Mutual Funds, bonds, T-bills, so on. Your money may not grow as fast as if it were invested in only one more risky high paying interest investment, but at least you'll get there with less risk, and stress. Remember, time and the power of compound interest are on your side. The younger you are and you would like to build wealth, do whatever you have to scrape together your investment contributions. Every day you procrastinate is another day your money is not working for you.


Consider that most people are spending their lives paying to borrow other people’s money. If you save and invest, other people will be paying you to use your money. It’s a lot more fun to see your money working for you building wealth.


The older you get the harder it gets to grow your money slowly. If you wait until you are 32 to put away $4,000 a year at 10%, you would only have about $975,000 by 65. At 42, you would only be able to accumulate about $350,000 by 65. As you can see, your wealth diminishes the later you begin investing because it is not able to rely on compound interest to work for you.


The moral of the story, start investing today, invest often, and as much as you can. Also, every dollar you spend is not invested, so live a frugal and more wealthy life.