Page 57 - Speedhorse, October 2021

FINANCIAL PLANNING
“When the majority of your wealth is sitting at the bank, it could be time to question whether or not you want your money to be working for you.”
Cade Peterson
would be a much different story. As of right now, interest rates are low, and borrowing is smart if done correctly. In order to change your mindset from saving to investing, you will have to accept the risk that comes with
it. Several people that claim to be investors
are the first to pull out of their investment when they see a correction in the market. The response to a correction or bear market is what separates good investors and bad investors.
I have a couple of interesting statistics I’d like to share about investing in well-known companies and how beneficial it could be. Let’s start with Walmart. If you would’ve purchased just 100 shares of Walmart back in 1970 after its IPO, the total investment would’ve been $1,650. Now over 50 years later, that investment would be worth over $4.3 million. Next, let’s take Apple. Say
you invested $10,000 in Apple at its IPO in 1980. Your investment would now be worth
over $6.7 million. Last example I want to share is Amazon. A $10,000 investment at Amazon’s IPO would be worth over $12 million as of 2020. Not bad, right? If we compare that to a savings account, we won’t even be in the same ballpark. The national average interest rate on a savings account
is 0.06%. Applying the rule of 72 that we discussed earlier, the time it would take to double your money would be 1200 years. Which return sounds better to you?
To conclude, I’d like to reiterate that having a savings account doesn’t make you someone with the saver mindset. Everyone should have an emergency fund at the bank. Roughly 6 months of expenses is widely recommended for funds in a savings account. However, when the majority of your wealth
is sitting at the bank, it could be time to question whether or not you want your money to be working for you.
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