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Greetings,
I am quite new to this forum being that I just signed up a couple of minutes ago. I am on here to ask about any long term investment strategies I can execute for the next couple of years of my life. Recently, I have read Dave Ramsey's Complete Guide to Money Makeover, and there he talks about his infamous ben and arthur story, where ben had started investing 2000 dollars around the age of 19 until he was 27, and arthur started putting money away for investment at around 27 to 65 and still came out with less money when it was time for retirement.

There is even a chart that shows the comparison amongst the two: https://bloominchurch.files.wordpress.com/2012/08/dave-ramsey-2000.png

My question is, being that I am 21 year old college student, balancing a part time job with full time courses, and making only 7.50 an hour, is there anyway I can afford to donate 2000 dollars a year into a longterm investment account to attain a success story similar to ben? Is there anyway I can invest more money into a longterm investment account and look retire around the age of 40? What is the best advice to give to a new Adult looking to develop wealth quckly?

My last question is, what are the best long term investment funds out there for me to invest 2000 or maybe even more a year?

Thank you so much for your help and time guys! I appreciate it!
 

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First let me :welcome: you Aharri42. :)

And let me congratulate you on thinking about these matters at your young age. A lot of us never get around to it until we're much older.

I would say skip the investing and put money into your education so you do not have any student loan debt, or as little as possible when you graduate. Having huge student loans is what killed my DD#1 financially when she left school before graduating. It was the reason she left. Too much debt. She and her DH worked lots of OT and second jobs to pay the debt off quickly so they could get on track again. Her comment was never again would she go into debt for an education. So really live frugally and keep your costs down as much as possible while in school.

What area are you getting your degree in? Some will have higher earning potential than others. Some are worth going into debt for to get the extra earning potential. My daughter's history degree was not!

My best advice for earning income is to diversify and have multiple income streams. We were late in the game on that concept. It's made a huge difference to our finances though. We rent out a room to a boarder (we're between boarders at the moment), and I run a business while DH works a salaried position. I don't know your living situation, but you might consider renting a two or three bedroom house/apt. and subletting other rooms to make a little extra money.

A lot depends where you live. I'm in Canada. If you're in the US you're better off getting advice from the Americans on the boards.
 

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I agree with peanut. Your best bet is to finish your college education quickly and with zero (or very little) debt. While investing in a retirement account is vital to planning for your future, when it comes to accumulating wealth that will allow you to retire in your 40's, you need to be investing outside of tax-deferred retirement plans. What you really want, ultimately, are businesses and investments that generate you income whether or not you decide to get out of bed that day. As the old saying goes, "Rich people have to work for their money, but WEALTHY people have their money work for them."

Welcome to the board.
 

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As peanut says - the marketability of your degree is the big factor. If you will be an MD, earning $200,000/yr, then it is wise to borrow as a way to get your income stream started sooner rather than later. Conversely, if your degree is social work, etc, that has an income stream close to min wage, then it makes no sense to borrow (as a way to complete the degree sooner). Because the survival level income stream will be consumed for living, there will be no excess that will allow you to repay $100k loans.

You can use the Ben/Arthur chart multiple ways - eg, if Ben had continued with his $2000/yr, he would have $3,821,162 (the sum of the two columns). Or, if he had invested $5000/yr (instead of $2000) he would have $9,552,905.

The magic of compounding is amazing, Einstein once said that the most important equation was compound interest.
But think of your income stream as finite. And your task is to direct that stream to its highest and best use.
For now, your income stream should be directed at a marketable degree.

And after you get your 'permanent' job, you should begin funding your wealth building. Keep your 'wants' in check so that you have some wealth-building funds - ie, get a normal house, not a McMansion, drive a normal car for its useful life, no new car lease every 2 years. That leaves money for going out, Starbucks, movies, yada. as well as investing for wealth-building.

In our case, we max'd our 401k from the time they were invented (1982) until retirement in 1998, that had about a million at retirement. And our other money went into a Taxable Index Fund at Vanguard that still grows (as does the 401k money, now in an IRA). But whatever account-type that you use - IRA, Roth, 401k, Taxable account - the keys are to fund it every month w/o fail, and to use an 11%/yr vehicle.

Here's why -
On the chart, Arthur used 12%/yr to get $1,532,183. If he had used a 6%/yr product it would be only $308,000. As you can see, $308k is way less than half of $1,532k. (ie, it's nonlinear). In my own calculations I use 11%/yr, that has been the longterm SP500 return for nearly all 30-year blocks of time.

Select your goal, (forget about the get-rich-quick idea), say $3M at age 55? Start at age 23 or 24, invest $11,000/yr @ 11%/yr to get $3M.
Or, if you have more patience and can wait until age 60 to have $3M, it only takes $6500/yr.
The money stacks up fast in the out-years, it doubles about every 6 years. Eg, if you had $3M at age 60, you'll have about $6M at age 66.
 

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Discussion Starter #6
Also, this is the most helpful advice i have read, my current major is 3d animation, wish can be marketable depending on how you use it.

In the future, I would like to be an art or marketing director for a well known copany.

As for the long term investment accounts, would it be a good idea to start an account in s and p 500? Or are there other really good longterm investment accounts?

Thank you so much for your help!
 

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Thanks for the tip, i should also add that as of now i am.not in any form of debt pertaining to college or anything else.

As for these businesses and investments that can make me money, is there anyway that you can give me some advice as to what investments i can involve myself with? Thank you!
 

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In the future, I would like to be an art or marketing director for a well known company.

As for the long term investment accounts, would it be a good idea to start an account in s and p 500? Or are there other really good longterm investment accounts?
The SP500 Index is best IMO. The generic SP500 Index is the barometer of the US, over 80% of the US capital is there, those 500 corporations provide a diversified ownership. The fund companies - Vanguard, Fidelity, Chas Schwab - each sell a fund that mirrors the SP500 Index, their funds are unmanaged, no one is buying/selling pieces of the 500 stocks, they are required to mirror the generic 500 totally. That means that there is no manager fee, just a small administration cost, about 1/2 %.
Here is a website for you - Political Calculations: The S&P 500 at Your Fingertips
It tracks the US SP500 index since the beginning of Time. You can try a few longterm blocks, in most cases you will see 11%/yr.

My career was engineering in the Space & Defense Industry. The major companies - Raytheon, Boeing, JPL Pasedina, Honeywell, General Dynamics, GE, Martin Marietta - all have Graphics Depts and Tech Writing Depts. In engineering, we would design a product for the Pentagon or a Defense/Space contractor. Graphics would assign a Book Boss to each portion - Exec Summary, System Description, Mech Design Description, Electrical Design Description, Cost Book. We would write rough drafts, make sketches, and do the math/physics analyses - Graphics would rewrite it into magazine format, convert the sketches into illustrations, break them into pieces so that every column had a picture (rather that solid print). That was 18 years ago - in today's money, I would guess that the Book Boss jobs pay $100,000, the Illustrators & Writers probably get $80,000.

I would caution you against getting a degree that's overly narrow (3D animation), I would broaden it with some academics. Some math, physics, tech writing, yada. In engineering, I felt that my math education paid me twice - (1) provided me with a solid income stream for 35 years, and (2) provided me with the skills to invest a piece of that income wisely and become wealthy.
The world changes, 3D animation may be gone in 20 years? The 'content' may be placed into our minds in a completely different way? Eg, say that I had narrowed my education to 'automotive only', But I was assigned to the Apollo Moon Program thru the 1960's and 1970's - and later to Missile design. If I had limited myself to 'automotive' I could not have been assigned to Space Projects.
 

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Discussion Starter #9
thank you so much for your help!

as for my major, I would really like to tie in my major with business and marketing, I believe there is a strong need for that in the industry, and marketing will be needed for years on end as long as there are products that need to be sold.

Once again, I thank you so much for advice Old Guy. I think I have put some things into perspective as to what I should in the future with my money. After talking with some family members, I have come to realization that I must save a decent amount of money once out of college so I can be able to sustain myself on my own and be able to afford a cheap used car and low-rent apartment. I will be posting a forum thread as to how much money I would need to get that started, but if you have any advice as to how much money I would need to save to get myself started, that would be great.

Thank you so much for your time!
 

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aharri42, how much you need depends on what part of the world you live in. Some areas of the US are more expensive than others. And I'm sure neither you nor your parents don't want you living in a dive with bugs. There's a lot to consider there. Renting an apartment is usually a budget eater, unless you have roommates. You might be better off living in a basement apartment, or renting a house and subletting rooms.

Used cars worked well for us. We always put reliability and safety ahead of any price tag. We have bought Toyotas new (on trade in for $14K) and used (for $10K CAD) and kept them on the road for 16-20 years respectively. Next up DH plans to buy a Prius secondhand to take us into retirement. Not sure I like that plan. A used Prius isn't cheap up here...about $20,000.
 
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