As featured in The Wall Street Journal, Money Magazine, and more!

May 2006

$400,000.

Do you consider someone with a net worth of $400,000 rich? Well-off? Comfortable? Would you set a lifetime goal for yourself at $400,000?

Actually, a net worth of $400,000 sets you well above the median net worth in this country, and in the world, to say the least. But these statistics don’t matter… what matters is your immediate environment. In your immediate environment, could you give up working once you have $400,000 when you subtract your liabilities from your assets?

Deal of the Day: Earn 1.00% APY on an FDIC-insured savings account at Ally Bank.

Dr. EvilI think many people will say “no” to this question, yet they’re willing to set a goal of $1,000,000 in the future — say, 30 years from now. $1,000,000 sounds much, much better than $400,000. With $1,000,000, one might be able to stop working and live off the income. At a 4% safe withdrawal rate, that’s $40,000 a year.

This is why some financial planners, some columnists, and even some bloggers are big on telling people what they can do now (how to invest) to increase the chances of ending up with $1,000,000 thirty years from now. It’s simple: invest $8,250 a year, invest in stocks, and pray for good markets at the end of the time period and a yearly average of an 8% increase.

The huge problem with this model is the fact that it completely ignores the effect of inflation. Assuming a 3% inflation rate over the next thirty years (it could be higher or lower, who knows, but this is a historical average), your $1,000,000 then will only be worth what about $400,000 is worth now.

By the time you’re a millionaire, a billion dollars may be what is needed for the “comfortable” life. With $1,000,000 in the bank, at the safe withdrawal rate of 4%, you’ll be living off the equivalent of today’s $16,000. (For that safe withdrawal rate — the amount you can withdraw while not depleting your funds over time — it’s assumed the money will be invested in the stock market, not sitting in a bank.)

Methinks you should strive for something well beyond $1,000,000 if your time horizon is 30 years.

{ 11 comments }

David Bach, the author of The Automatic Millionaire and The Automatic Millionaire Homeowner (the latter of which I reviewed earlier this year), also writes a column on Yahoo Finance. Recently he presented five tips for college graduates just beginning their path to financial security. This follows Part 1.

Here is the next tip Bach is providing for recent graduates: [click to continue…]

{ 2 comments }

David Bach, the author of The Automatic Millionaire and The Automatic Millionaire Homeowner (the latter of which I reviewed earlier this year), also writes a column on Yahoo Finance. Recently he presented five tips for college graduates just beginning their path to financial security. (This ties in nicely with Friday’s thoughts about graduates aiming for the highest-paying first job possible.)

Here are the first two of Bach’s five tips for graduates: [click to continue…]

{ 4 comments }

I’ve been developing a series about becoming your own boss, and this is part 5 in that series. The information is based on an article from MSN, but I’m pulling in information from other locations as well.

Step 5: Raise Money

Now that you have a solid business plan that outlines how much capital you need, it is time to find it. Here’s what our article suggests: [click to continue…]

{ 0 comments }

Stay Connected With Consumerism Commentary

by Luke Landes

Most readers know that they can subscribe to the Consumerism Commentary RSS feed, bringing the full text of these entries to your reader, the way you like to see it. You can also subscribe to Consumerism Commentary to receive the latest posts through an email message once a day. Just enter your email address here:

0 comments Read the full article →

Six Steps to Being Your Own Boss, Part 4

by Luke Landes

I’ve been developing a series about becoming your own boss, and this is part 4 in that series. The information is based on an article from MSN, but I’m pulling in information from other locations as well. Step 4: Build a Bulletproof Business Plan A young entrepreneur should want People Who Matter to take his […]

0 comments Read the full article →

Don’t Get Ahead, Start Ahead

by Luke Landes

This is an interesting article from the New York Times. Research shows that your first job dictates how much your income will be your entire working career. The recent evidence shows quite clearly that in today’s economy starting at the bottom is a recipe for being underpaid for a long time to come. Graduates’ first […]

12 comments Read the full article →

Six Steps to Being Your Own Boss, Part 3

by Luke Landes

I’ve been developing a series about becoming your own boss, and this is part 3 in that series. The information is based on an article from MSN, but I’m pulling in information from other locations as well. Step 3: Fight Inexperience With Advice Step one was to gain experience. It will still be difficult for […]

0 comments Read the full article →

Six Steps to Being Your Own Boss, Part 2

by Luke Landes

Yesterday, I wrote about the first step to being your own boss, gaining experience. Working for oneself is a dream many people in this country have, and here is the second step for reaching that goal, according to MSN. Step 2: Build A Winning Team The article says that you should find people whose skills […]

2 comments Read the full article →

Strong Hurricane Season Approaching

by Luke Landes

The National Oceanic & Atmospheric Administration (NOAA) is predicting a very active hurricane season (June 1 through November 30) this year. The organization is encouraging people living in the affected areas to begin preparations. For the 2006 north Atlantic hurricane season, NOAA is predicting 13 to 16 named storms, with eight to 10 becoming hurricanes, […]

4 comments Read the full article →
Page 1 of 3123