Theodore Johnson worked for UPS and never earned more than $14,000 a year. But...in his old age, he was worth more than $70 million. This achievement came thanks to a friend of his.
When Theodore indicated that he had no money to save, his friend told him to think of saving as a tax. Because, he said: you don't consider tax to be spendable income either.
So Theodore made a decision: he asked his employer to automatically deposit 20 percent of his income each month into a UPS investment account.
More than five decades later, that has generated $70 million through compound interest
A simple story that captures the power of interest on interest.
Saving money each month helps
Theodore Johnson demonstrates a valuable lesson. Setting aside money each month for your future you can add up tremendously. No matter how small or large the amount, it is better than saving nothing at all.
And what three things can we really learn from this story?
- Price increases are your enemy. The money in your savings account is worth (seriously) less every year.
- Automate your (savings) investments. Like Theodore, treat it like a tax: it's a percentage that's not part of your disposable income.
- And one, which Theodore did not do, but perhaps could (should) have done, despite his built-up wealth: spread out your investment opportunities. Theodore chose one basket for his eggs (UPS). This, of course, is risky.
Automatize for success
Want to retire rich, get started. Decide what amount you can transfer to your investment account each month. Pro-tip: automate this process. Do this just like Theodore did. Have it transferred automatically as soon as your salary comes in. Live off the money you have left and feel confident about your financial future.
The Flow app is super convenient here because you only have to set once how much money you want transferred to your investment account each month. After that, you don't have to worry about it anymore: Flow automates all your transfers.
Are you looking for an effective way to build up your capital and let your money grow? Choose index investing with Flow and Meesman. Accessible and simple.
