As an important preface, if you have any high-interest debt, such as credit card debt, I recommend you do NOT buy stocks or investments, and instead put every dollar you can towards getting out of debt.
For more on that, I suggest you read the following post of mine:
Advice about credit cards: Do NOT ever pay a penny in credit card interest. If you have credit card debt, pay it off ASAP!
Roughly speaking, I'd say any loan or debt with an interest rate over 5% can be considered high interest. So if you have any loans or debts with an interest rate higher than 5%, my advice is to pay those off as fast possible, instead of investing in the stock market or such. If you have any high interest debts (i.e. any debts with interest rates over 5%), I strongly recommend you put at least half your income towards paying that off and getting yourself out of debt, even if that means doing things like moving into an apartment or house that is half the size and half the cost of your current one. That advice applies even if it means using half as much heat at home as you currently do and shivering under lots of blankets at night. It applies even if it means using half as much air conditioning and sweating a lot. It applies even if it means wearing your clothes twice as many times as you currently do before washing them. As I've said many times before, most people who claim to have an income problem actually have a spending problem. For the typical person in debt, if you doubled their income, they'd just end up twice as far in debt. For them, the mantra holds true: More money, more problems.
Moving on, if you are already out of debt, meaning you do not have any high-interest loans at all and your net worth is above $0, then I strongly suggest you start investing in the stock market or something that offers similar returns right away now.
Start young, or at least start as young as you can. And, you will never be younger than you are now. So (if you haven't started already) start now. Today. Not tomorrow. Today.
The human mind cannot intuitively understand exponential growth. It intuits growth as linear growth. Thus, almost all humans drastically underestimate the power of exponential growth.
For example, if you start with a penny, and double it each day, so that on the second day you have $0.02, on the third day you have $0.04, and so on. Then by the end of the month you would have over ten million dollars. That probably seems unbelievable to you, which demonstrate how terrible the human mind is at intuitively understand exponential growth. It's simple math, though; here's the equation for 30 days: $0.01*(2^30) = $10,737,418.20. See, even though it's an experiential equation (i.e. has an exponent) that represents exponential growth, the human mind intuitively thinks of a linear equation/system like 2 + 2 + 2. If you only added $0.2 each day, then after 30 days you would only have sixty cents ($0.60) instead of ten million dollars; that's the difference between liner and exponential. And, even when you have a system or growth that is blatantly exponential, the human mind falsely intuits it as linear, meaning, for example, that your gut instincts will be totally wrong when it comes to such cases.
Here is another example: If you fold a piece of paper in half 42 times, it will be so thick it will reach the moon.
Again, your human mind most likely falsely thinks linearly. Your gut instinct is that it would be as think as 42 pieces of paper stacked on top of each other, which would be linear growth (each new piece of paper adds the width of one slice). If you graphed that linear growth it would be a steady straight line, hence the name. In contrast, when graphing the exponential growth, it is a curve that shoots to the sky. If you added a 43rd fold, it would be so thick it would double the distance from the moon. One more fold adds as much growth as all of the previous folds combined. In contrast, adding a 43rd piece of paper to a stack still only linearly adds that one piece of paper's width. It's a simple addition and multiplication equation that creates a line, rather than an exponential equation that quickly curves up and shoots out of sight to the sky.
Just as with the previous two examples, to their own financial detriment, most people drastically underestimate the true cost of interest and debt and likewise drastically underestimate the power of investing.
The stock market returns a rate of about 10% per year, meaning if you put $100 into stocks right now, you will have (on average) $110 in year. That's what's called making your money work for you. You will have profited $10 by doing essentially nothing, just letting your money work for you.
That sounds good to most people, but what most people foolishly do is drastically underestimate what that really means. They again think of it as mere liner growth, meaning they think that after 30 years they would only have profited $10 * 30, meaning only $300. Wrong! Totally and utterly wrong! That's like thinking you would only have $0.60 cents after doubling $0.01 30 times. No, at 10% per year, after 10 years, you would have $1,744.94, meaning you would have profited $1,644.94. That's how much your $100 will make for you if you let it go to work for you now and let it work for 30 years, even at that modest 10% rate. You would have made nearly $1,644.94 by doing essentially nothing. In this way, making money is easy for those with self-discipline.
Here is what the graph of what that would look like:
- The results over time if you invest $100 with a 10% annual return and leave it invested for 30 years.
Notice how the graphed growth curves upward, not linear, i.e. not a straight line.
Of course, I don't recommend merely putting $100 into an investment account and then investing nothing else.
Instead, as always, I recommend leveraging the power of micro-habits combined with exponential growth.
Here are some numbers showing how that will look over time:
If you invest $5 per day (only $35 per week), you will have over a million dollars in 43 years.
If you invest $10 per day, you will have over a million dollars in only 36 years.
If you invest $20 per day, you will have over a million dollars in only 29 years.
If you invest $50 per day, you will have over a million dollars in only 20 years.
Interestingly, to get to one million within only 10 years, it would require $172 per day. It's extremely expensive (and thus often impossible) to make up for lost time, because then your money doesn't have time to work for you. It's better to consistently invest a little bit in over a long time than a lot of money over a short time. Safe consistent small investments make millionaires, not desperate get-rich-quick schemes.
The sooner you start the less it is going to cost you, by far. So start now.
Over the long term (e.g. 5+ year periods), making money is easy for those with self-discipline, especially since the kinds of thing that most people can't see of which this post has discussed (e.g. the power of exponential growth versus linear growth) comes up all the time in business and finance, not just with investing in the stock market or with the common foolish choice to take on credit card debt or other high-interest loans, with one's debt then growing exponentially.
Self-discipline allows one to trust the math and follow the plan, meaning to see and make use of what is invisible to most people.
What others see as wild seemingly impossible levels of extreme external success is ridiculously easy for those with extreme self-discipline, who are in a loving cooperate relationship with their selves over time, which is something my book, In It Together, teaches.
Becoming a millionaire is as easy as losing 200 lbs or quitting alcohol or quitting cigarettes. Generally, it's simply about learning the power of doing nothing, or at least of doing much less. And, at least for those following the teachings of my book, there's nothing easier than doing nothing. It takes more time and energy to eat and drink and spend money than it does to not eat and not drink and not spend money and to do nothing. It literally takes zero time, money, and energy to do nothing. Doing nothing is free, and learning how to exercise the power of doing nothing is key to spiritual freedom (a.k.a. self-discipline).
My book, In It Together, will teach anyone how to have extreme full-fledged self-discipline (a.k.a. spiritual freedom). Anyone who reads my book, In It Together, and follows the 11 infinitely easy-to-follow suggestions at the end is guaranteed to instantly have extreme full-fledged self-discipline.
With love,
Eckhart Aurelius Hughes
a.k.a. Scott
Best Stock Broker for USA Residents:
Robinhood -- Free stock when you sign up with this referral link.
Reliable Stock Brokers for non-USA Residents
I have not used these, but they are all well-known companies that (to the best of my knowledge) allow non-USA residents to invest in the USA stock exchange:
Interactive Brokers
TradeStation Global
CMC Markets
Swissquote
Saxo Bank
Charles Schwab International
TD Ameritrade
Firstrade
Zacks Trade
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UK-Specific
Fidelity (UK Version)
- I personally use Fidelity (USA Version) for my kids' custodial investment accounts, so I can recommend it.
- The results over time if you invest $5 per day (only $35 per week) every day for 43 years. At the 43-year-mark, you would have only invested a total of $78,432, but you would have $1,080,538, meaning you would have made over a million dollars in profit alone.
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In addition to having authored his book, In It Together, Eckhart Aurelius Hughes (a.k.a. Scott) runs a mentoring program, with a free option, that guarantees success. Success is guaranteed for anyone who follows the program.
