It’s not always easy to save money, and we hear all the time how awful Americans are at saving money. Is it that we’re not good at it, don’t have enough money, or don’t want to?
It has been documented by Harry Dent, the demographer, that on average at age 46, we hit a peak and have the most debt of our lifetimes. We have a mortgage, kids in college, parents needing care, etc. and so it’s hard to save. Soon the kids are out of the house and we’re empty nesters, able to save a lot more. So don’t fret, it’s only temporary… and normal.
Still, saving a nest egg to invest and build wealth is a challenge. Here’s a hint: if you ever get a large lump sum of money from selling a home, an inheritance, or winning the lottery, don’t spend it. Invest it. Do you realize how hard it is and how long it takes the average person to save a large lump sum? Keep it whole and invest it, and you’ll soon have a fortune, in no time at all. Unfortunately, most people inherit a lump sum and it’s all spent in about two years. They’re back to trying to save a nest egg once again. So if you are lucky enough to have five or six figures land in your lap, set it aside and invest it wisely.
Having a larger sum to invest means you can grow it faster. Since you’re starting with a larger amount, it will double faster. Using “The Rule of 72″, I can show you how easily a lump sum will double. The “Rule of 72″ says that money doubles when the interest rate times the years it’s invested equals 72. For example, $10,000 invested at 7.2% will double to $20,000 in 10 years (10 x 7.2=72). So a $100,000 lump sum invested at 7.2% will become $200,000 in 10 years. See how much easier it is to become wealthy when you have a larger lump sum to invest to begin with? So, realize how precious it is to have a large lump sum and don’t squander it, invest it. If you do that, in no time at all you’ll be set for life!