07 Jan 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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