Why Should You Invest 20-25% Instead Of 10-15%?

All right, next up, we’ve got a question from Stephen. He says, “I am curious to hear about why the Money Guys show has increased their promoted savings and investment rate from 10% to 15% for younger savers several years ago in your videos, up to 20%, and now 25% for all savers. I’m honest; I think this is a great question. First of all, why do we say 20% to 25%? But I also thought, man, this guy is like an OG. Like 10-15%, he just went down the rabbit hole.

So I’ll go on and see here’s where, like, I was meeting with somebody yesterday, a consultant, and they’re like, ‘You know, when we first met, I knew you had a successful channel, but I had no idea you’ve been podcasting since 2006.’ I was like, ‘Yep, a long time, been doing this for a while.’ Wow, you know, it shows how nerdy I am. Not brilliant nerdy because I was doing podcasting before anybody knew what podcasting was. To the point that my wife was telling friends, ‘Please don’t pick on him; he’s really energized about this.’ And it really was a passion project in the beginning. I realized, let’s look at who were influencers on me when I even started this. Wealthy Barber, Millionaire Next Door – I mean, you can even, you know, it came in later. I’ve gone through some of Dave’s books with The Total Money Makeover, and you look at all the stuff that came out in the ’90s. What did it tell people to save? Wealthy Barber was around 10%, Dave talks about 15%. As I have because I realize a lot of time has passed between 2006 to 2023, and the world has changed significantly. Now, can you tell me Social Security is on firm footing? I can’t; I mean, that’s struggling. And we’ve actually now done the math; we have a great resource on showing what 25% can actually do for you. I’m trying to give the team enough time to put it up there; I can see them scrambling. But look at this; this will show you, and this probably also will lead to what you’re seeing, Stephen, is that, yeah, of course, somebody who starts out when they’re 20 years of age, a little goes a very long way. But what I have found out, the average, the typical starting point for people on their journey to becoming financial mutants, it’s not in the 20s, unfortunately.

Typically, they catch a clue in their early 30s, and all of our research shows you need to be thinking at that 25%. So now it seems like since the net catches a lot more people and impacts a lot more people because that’s the reality. 25% is what most people need to be doing if you’re a financial mutant and caught on to this concept when you’re 15 years old or 20 years old, of course, you can do less. But should you? I’m going to challenge you to be the best version of yourself because let me tell you what I have found: the more you do while you’re young, do you know how much flexibility, how many options you get when you overachieve at a young age because you not only maximize the component of time but time with extra resources, telling you, you almost get that Ric Flair. I mean, CU, it gets really exciting at that exactly right. I think that what’s amazing is what we’re doing; we talk all the time about financial independence. But we also talk about this fifth level of wealth, this abundance, this really leaning into what is my purpose, what do I value, what do I want to use the resources for? Well, what we found is the folks who can save early and save often and build up their wealth early enough, they get to this place where they start really focusing on, ‘Okay, what do I want this life to look like? All this money that I’ve saved, all this wealth that I’ve built up, it now gives me options. It now gives me freedom. It now gives me flexibility.

Hey, I want to check out at age 50; great, I can do that. I want to start volunteering at 55; awesome. Yeah, I had a 30% savings rate; now at 55, I can do what I want when I want the way that I want.’ What we have found is that the earlier someone can catch on to saving 25% of their gross income—if you don’t have the deliverable, go down, download it, moneyguy.com/resources—the sooner that you can grab onto that, the sooner you’re going to give yourself the freedom and flexibility to start doing life on your terms, to recognize that money is just a tool, and now that I have stacked up my tool chest, I can go build whatever I want to build. And that gets a whole lot of fun if you can figure it out early if you can start moving in that direction. For more information, check out our free resources.