<div class="quote_poster">Chuck Wrote</div><div class="quote_post">Dude, no they don't. Not even everybody in America has a chance, but none of us can even begin to fathom how bad it really is elsewhere.
How can you say that? I'm really interested in hearing more...</div>
There's no simple formula to it, and the best way for me to explain it would to use an individual example and then tweak it to apply to others.
From my experience most people don't understand how to accumulate wealth. I used to be a financial planner for a wide array of people, and in most cases these people were very wasteful and uninformed with their cash flow situation.
You have to start with the basic question. How much do you need to make every month to live? Food, rent or house payments, gas, car payment, car insurance, utilities etc.
It's a simple question, but most people can't give you a straight answer. When you start having them write it all down, they are shocked when they find out they are spending more each month than they are bringing in. These people are like most Americans, living on credit and in debt.
So my goal used to be getting people to be smarter with their money and to change their spending habits to fit within the proper lifestyle. The proper spending habit is to spend less than you make each month and the difference becomes your tool for accumulating wealth.
Even if it's just $100.00 you can afford you can begin accumulating wealth by investing in low-risk, high dividend paying stocks. The average yield on dividends over the last 80 years is 4.39%.
This doesn't include the increase in the stock price either.
Let's say for argument sake the stock price doesn't increase and you just receive 4.39% dividend.
The compound interest formula is:
M = P( 1 + i )n
M is the final amount including the principal.
P is the principal amount.
i is the rate of interest per year.
n is the number of years invested.
M = 100 (1+.0439)12
I'll explain more on this tomorrow.
