I've shared a host of bad news over the past couple months (mostly related to how little Americans know about managing their money), so it's time for some good news.
Here's a piece from Yahoo that tells how a librarian left $4 million to his university. Some details:
You wouldn't know it from his lifestyle, but Morin — who graduated from the University of New Hampshire before working in the school's library for nearly 50 years — was a multimillionaire. In fact, very few people did know, until he died in March 2015 at age 77 and bequeathed his entire $4 million fortune to his alma mater.
Morin's simple lifestyle allowed him to stash most of his income in a checking account and certificates of deposit, and his advisor helped him contribute to mutual funds and annuities, the Boston Globe reported: "Morin also bought several life-insurance policies over the years, all intended to benefit the university from which he earned a bachelor's degree in 1961."
So the guy was a librarian, not the highest-paying job out there. And somehow he managed to save/invest $4 million. How could he do this?
- Spent significantly less than he earned
- Worked for 50 years
- Invested wisely
Let's assume the following:
- He invested for 50 years
- He got an 8% annual return on his money
How much would he need to invest per year to get to $4 million?
Just under $7,000. Totally doable.
Based on his standard of living and his investments I'm guessing he saved much more each year and got a lower rate of return.
Whatever actually happened his life shows you can amass a tremendous amount of wealth if you save enough for a long time even with a modest return rate.
And you don't need to live on Fritos, cheese sandwiches, and frozen dinners like he did to do so.
You need to simply:
- Grow your career and any other income sources. Just a 1% difference in annual career earnings can mean an extra $1 million or more.
- Control your spending. You don't need to be a miser but you need to select what you spend money on and keep it within reason. Doing this will widen your gap and give you much more to invest.
- Invest over a long period of time. You need some sort of growth vehicle like index funds to multiply your savings. Add in a long period of time and your investments will soar.
They are simple concepts to understand and easy to execute -- as long as you have discipline.