Simple Is Beautiful

Simplicity is the ultimate sophistication.

Leonardo da Vinci

It is easy to become wealthy in the United States.

I’ve said it many times to customers, prospective customers, on social media, and to complete strangers. I’ve written several articles showing how anyone living in the U.S. can easily become a millionaire.

The reason more people aren’t wealthy is because they don’t make becoming wealthy a habit.

So, as you ponder your New Year’s resolutions, let’s discuss an easy way to make becoming wealthy a habit.

“New” research says it takes 66 days to create a habit. That’s a little over 2 months. So, if you start creating a wealth building habit today, by the middle of March it should be second nature.

Likewise, it also takes 66 days to break a habit. This means that it is difficult to break a wealth building habit once created.

So how do you get started? It’s really very simple; automate your saving & investing. The easiest way to do this is through your 401(k) or other employer sponsored retirement plan.

Just log-in to your account and set your contribution rate at a minimum of 10%. If you’re not currently participating in your employer’s plan, call HR and tell them you’d like to get started … today. Whether you’re changing your contribution rate or signing up for the first time, it shouldn’t take more than a few minutes.

As for 10%, research repeatedly shows that 10% is the minimum necessary to become wealthy. Just remember, 10% is a minimum. If you can afford to contribute more, do so.

You have now automated your saving & investing. Your employer will deduct 10% from each of your paychecks and deposit it into your 401(k) account, where it will be invested however you’ve directed. After 66 days your saving regimen will become habit, leading you down the path to wealth.

Assuming you get your first good job at age 23, this is what your 401(k) account might look like when you retire. Just remember, this doesn’t include employer contributions, which will dramatically increase the value of your account.

AGE  CONTRIBUTION  BALANCE
23  $                4,979  $         5,564
24  $                5,128  $      11,949
25  $                5,282  $      19,257
26  $                5,440  $      27,602
27  $                5,603  $      37,110
28  $                5,771  $      47,924
29  $                5,945  $      60,204
30  $                6,123  $      74,127
31  $                6,307  $      89,892
32  $                6,496  $    107,724
33  $                6,691  $    127,869
34  $                6,891  $    150,609
35  $                7,098  $    176,253
36  $                7,311  $    205,151
37  $                7,530  $    237,693
38  $                7,756  $    274,314
39  $                7,989  $    315,502
40  $                8,229  $    361,802
41  $                8,476  $    413,822
42  $                8,730  $    472,244
43  $                8,992  $    537,829
44  $                9,261  $    611,428
45  $                9,539  $    693,993
46  $                9,826  $    786,588
47  $              10,120  $    890,401
48  $              10,424  $ 1,006,762
49  $              10,737  $ 1,137,156
50  $              11,059  $ 1,283,245
51  $              11,390  $ 1,446,885
52  $              11,732  $ 1,630,150
53  $              12,084  $ 1,835,361
54  $              12,447  $ 2,065,110
55  $              12,820  $ 2,322,295
56  $              13,205  $ 2,610,154
57  $              13,601  $ 2,932,308
58  $              14,009  $ 3,292,804
59  $              14,429  $ 3,696,164
60  $              14,862  $ 4,147,442
61  $              15,308  $ 4,652,289
62  $              15,767  $ 5,217,020
63  $              16,240  $ 5,848,691
64  $              16,727  $ 6,555,192
65  $              17,229  $ 7,345,338
66  $              17,746  $ 8,228,982

What about those of you who are saying; “Well I’m 40 & I haven’t started saving. How much could my account be worth?”. Let’s see.

AGE  CONTRIBUTION  BALANCE
40  $           8,229  $         9,196
41  $           8,476  $      19,750
42  $           8,730  $      31,829
43  $           8,992  $      45,622
44  $           9,261  $      61,337
45  $           9,539  $      79,212
46  $           9,826  $      99,508
47  $         10,120  $    122,520
48  $         10,424  $    148,579
49  $         10,737  $    178,051
50  $         11,059  $    211,349
51  $         11,390  $    248,933
52  $         11,732  $    291,320
53  $         12,084  $    339,084
54  $         12,447  $    392,871
55  $         12,820  $    453,400
56  $         13,205  $    521,477
57  $         13,601  $    598,003
58  $         14,009  $    683,985
59  $         14,429  $    780,547
60  $         14,862  $    888,949
61  $         15,308  $ 1,010,598
62  $         15,767  $ 1,147,065
63  $         16,240  $ 1,300,110
64  $         16,727  $ 1,471,697
65  $         17,229  $ 1,664,024
66  $         17,746  $ 1,879,546

Of course, there are some negative Nellies out there saying; “Yeah, but I’m 50 & I don’t have anything saved.”. You can also become a millionaire before you retire. If you’re over 50, you probably have all of the kids out of the house, your mortgage paid off, & small monthly income needs. So why don’t you max-out your 401(k) contribution? The limit for 2019 is $19,000. If you’re age 50 or older, you can also contribute an additional $6,000 ($25,000 total).

AGE  CONTRIBUTION  BALANCE
50  $         25,000  $       27,940
51  $         25,000  $       59,166
52  $         25,000  $       94,064
53  $         25,000  $    133,066
54  $         25,000  $    176,654
55  $         25,000  $    225,369
56  $         25,000  $    279,812
57  $         25,000  $    340,658
58  $         25,000  $    408,659
59  $         25,000  $    484,657
60  $         25,000  $    569,593
61  $         25,000  $    664,517
62  $         25,000  $    770,605
63  $         25,000  $    889,168
64  $         25,000  $ 1,021,674
65  $         25,000  $ 1,169,763
66  $         25,000  $ 1,335,267

Note that at no point in this illustration did we stop making contributions, lower our rate of contribution, stop investing, borrow against our account, or cash out our account. Most people will take one or more of those actions during their working years, which can easily prevent you from becoming wealthy.

I know this sounds too easy, but it really does work. One of the reasons most people never try to become wealthy is because they think it’s difficult to do. It’s not. The wealthy know how easy it is, which is why they were able to create their wealth.

The point is, it is easy to become wealthy in America. You just have to do it.

*Average Return is based on the S&P 500 Index, which has averaged 11.76% per year since inception.

*Income is based on an average starting salary & an annual raise of 3%.

Sapiat Asset Management is an independent registered investment advisor, specializing in financial planning based, asset management for Gen X Individuals & Families, their Businesses, & the Trusts that benefit them.

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