Lifehacker shares a post from Budgets are Sexy (a site I love, BTW) that guarantees you'll become wealthy if you just take one of these simple steps:
1. Max out your ROTH IRA every year ($5,500)
2. Max out your 401(k) every year ($17,500)
3. Max out BOTH your IRA and your 401(k) every year! ($23,000)
4. Pay off your entire mortgage and save the future payments
And here's the thinking behind this:
You do any of those on rotation year in and year out, and I guarantee you'll reach financial freedom in 20-30-40 years from now. All depending on your expenses, and lifestyle, yada yada… (And if you're not in a position to invest large amount of money every month/year, at least start with SOMETHING. Even just $100 or $200 a month can do enough to snowball you towards your goals faster!)
I agree and disagree. I agree in the sense that if you do almost anything that allows you to invest several thousand dollars each year for 40 years, you'll be wealthy at the end of those four decades. I disagree (a bit) because it's not that simple. There are several steps most people would have to take to get even close to saving $23k a year, especially considering the average household earns about $50k a year.
And while I appreciate the simplicity of the advice, I prefer multiple steps toward wealth. Saving/investing plus growing your income plus keeping your cost of living low and so forth.
What's your take on the list? Good or bad?