You Will NEVER Look At Wealth The Same After This

Let’s play a quick game. I want to play a game. If I gave you an option—do you want to be an 18-year-old with $10,000 or a 65-year-old with a cool million dollars—what would you pick?

Guys, this is the type of conversation that I love having with anyone that will listen, because I am by nature an optimist, and I love showing people the power of taking an active role in your financial life. Unfortunately, though, most people are not in the driver’s seat of their financial life. If I’m being honest, most people are actually tied up in the trunk and they don’t even know where they’re going.

But the earlier you can take charge of your future, the better—and you might be able to do it even earlier than you think. A lot of young folks out there look at people older than them with envy. But what if I told you that those people look at you with envy—because you have the most valuable resource available: the elusive and ever-escaping component of time?

But do not mishear me—you may have time on your side, but do not fall into the trap of thinking, “I’ll just get to my money later because I have plenty of time.” Procrastination is not your friend. In this video, I’m going to show you why this is a mental trap. And if you’re finding this video later on, don’t worry—it’s not too late for you either. It’s never too late to build a better future for yourself.

But before we get into it, one thing everyone can do to build a better future for themselves is to subscribe to The Money Guy Show. So subscribe, like this video, and ring that notification bell. Now, let’s jump right in.

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This whole thing hinges on one of the most powerful components of personal finance: compounding growth. We like to call this the wealth multiplier. The wealth multiplier is a tool that we designed to show you just how powerful your dollars can become.

The example we use on the show all the time is that for a 20-year-old, every dollar that you invest has the potential to become more than $88 in retirement. And what I’m about to say will show you why this is so essential—to start as early as you can saving and investing for the future.

A 20-year-old has a wealth multiplier of 88 times. By the time you reach age 25, that wealth multiplier has already dropped and been cut in half—to 44 times. By age 30, it’s dropped to 23 times.

It’s important to note that our wealth multiplier calculation assumes that for every dollar invested at age 20, you can predict an annualized rate of return of 10% from the time those dollars are invested until retirement. But every year, that assumed rate of return drops by 0.1% until reaching a terminal rate of return of 5.5% at 65.

Meaning, that for every dollar invested at 21, you would assume 9.9%, and so on. If all those numbers went in one ear and right out the other, don’t worry. All you need to know is that the earlier you invest, the more powerful those dollars become.

So if you can grasp this concept of the wealth multiplier, this will change the way you make every small financial decision in your life—how you spend, how you save, and definitely how you invest. That is why it is so important that when you’re young, to do something to take advantage of those amazingly powerful dollars that you have at your disposal.

And if you’re seeing this video later in your wealth-building journey, let this be the motivator you need to take action today. If you want to figure out your exact wealth multiplier, you have a few options: you could use this formula, or you could just go and let us do the work for you by using our wealth multiplier calculator at moneyguy.com/resources.

But let’s get back to my original question. If you haven’t already done the math, don’t worry—we are here to show you the numbers.

At the age of 18, each dollar has the potential to become nearly $108 in retirement. That means if you picked being 18 with $10,000, each dollar of that $10,000 would become $108. In other words, that investment would have become $1,080,000. The 18-year-old came out ahead—all because they did the hard work of saving and investing early.

You might be thinking, “No way an 18-year-old can save $10,000.” But with a part-time job and living at home, saving $10,000 after taxes could be done on less than $11 an hour.

If you’re seeing this later than 18, please do not mishear us and think that it is too late for you to start. Remember, your dollars can still multiply 23 times over at the age of 30. Do you want 23 times as much money? I know I sure do.

So we’ve shown you the numbers—but now, where do we go from here?

As you’re using our wealth multiplier calculator and setting out on your wealth-building journey, there are two more resources I want you to look at. The first is called Are You on Track to Becoming a Millionaire? This will give you a great benchmark of where you are at relative to where you need to be in order to save your first million. The other is the actual wealth multiplier resource. This will give you a more comprehensive overview of how the wealth multiplier works at each age, and it will show you how much you need to save and invest each month to reach your first—and even second—million.

Don’t let your financial future take a backseat any longer. Get out of the trunk. Start building wealth today. Take advantage of all of our resources at moneyguy.com. Make sure you subscribe if you’ve not already and share this video with someone who needs to know the power of the wealth multiplier.