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Let’s get the bad news out of the way…
If you didn’t start investing when you were 19 – as in the day you began your last year of teenage-hood – you started investing too late.
That’s essentially what David Bach told CNBC early on in July. And, I hate to say it, but he’s not wrong.
Who is David Bach, and why should you listen to him? I’ll let his website, www.davidbach.com, do the talking:
“David Bach is one of America’s most trusted financial experts and bestselling financial authors of our time.
He has written 12 national bestselling books, including 10 consecutive New York Times bestsellers [and] 12 Wall Street Journal bestsellers with over seven million books in print, translated into 19 languages.”
Speaking as an author myself with a book that does pretty well for itself ( The Intelligent REIT Investor)… that’s a lot of bestsellers. Yet, let’s face it, the bestselling title alone doth not a worthy read make.
I’m sure you can think of writers who are exceptionally popular who you “just don’t get.” They might be novelists whose works seem contrived, predictable or plain old boring, prompting you to puzzle…
Why would people pay for it?
Likewise, while there are plenty of popular nonfiction reads available that are exceptionally informative, engaging and accurate, there are also those that, shall we say, are lacking in those areas.
Yet book shoppers buy them in droves anyway.
In Bach’s case, I can’t claim to have read all his work. So I can’t tell you that every page he’s ever published is profitable. No doubt, there’s some fluff in there.
I’d imagine it’s difficult to write so many nonfiction books otherwise.
But that just isn’t the case regarding what he shared with CNBC. That information is brutally direct.
A Self-Made Millionaire
The article I’m referring to is titled, “Self-Made Millionaire: A Simple Chart Changed the Way I Think About Money.”
Here’s how it begins:
“Before wealth manager and author David Bach made his first million, he was a brand-new financial advisor in his early 20s. He tells CNBC Make It: “We had someone come and talk to our training class, and as he walked out the door, he handed us this chart.”
Ultimately, the chart “changed my life,” Bach says.
As it turned out, the chart pitted two sets of investment decisions against each other to see which came out ahead. The first centered around someone putting $2,000 into a portfolio every year between the ages of 19 and 27. After that, from 27 all the way to 65, this hypothetical individual contributed nothing.
As in zero dollars.
Also known as zip. Zilch. Nada.
Investment decision No. 2 involved that same person putting that same amount into that same portfolio every year. Only, those deposits began at age 27 and continued on until the individual turned 65.
A much wiser decision, right? Let’s do the math…
The first scenario consists of eight years; the second of 39. So it only makes sense to assume that the longer investment span would reap the biggest monetary rewards.
Yet, as the article goes on to explain, “the person who starts at age 19 would end up with more money in their portfolio in the long run.”
A good bit more money too. “Assuming a 10% rate of return, the first person would have $1.02 million by 65, while the second person would have $805,185 – a difference of more than $200,000.
The Shocking Truth
How can that be? How can eight years of $2,000 each beat out 39 of the same? Not to mention by a fifth of a million!
Believe it or not, there’s nothing made up or magical in this seeming switch-up. We’re still dealing with real math, real numbers, and real logic.
Because we’re dealing with real compound interest, which works most powerfully when it can work over time. The longer it has to run, the more it can play out and the more it can pay out.
If you’re feeling exceptionally depressed about this information, don’t be. There’s no point to it. There’s also no point to devoting the rest of your life to building a functional time machine that can take you back to before you turned 19.
Unless you already own a very special (very fictional) Delorean, you’d be wasting your time. And remember, time is money.
You’re much better off taking the time you do have to start investing what you can. As Bach told CNBC, “Start investing today.”
It’s true that you might not make as much as you could have. But you can still make something.
Something worthwhile too.
4 Strong Buys and Here’s Why
Tomorrow I plan to publish the August edition of the Forbes Real Estate Investor and included in the monthly REIT research report are over 150 U.S. equity REITs, many of which are trading at sound value.
I have carefully scanned the REIT universe to filter out the stocks that are trading at the widest margin of safety. As intelligent investors recognize, finding deeply discount stocks is the key to long-term success, and here are four of the cheapest stocks we like today:
Tanger Outlets (SKT)
Sector: Malls
P/FFO: 7.0x
Dividend Yield: 8.7%
Rating: Strong Buy
Simon Property (SPG)
Sector: Malls
P/FFO: 13.0x
Dividend Yield: 5.2%
Rating: Strong Buy
Medical Properties Trust (MPW)
Sector: Healthcare
P/FFO: 13.2x
Dividend Yield: 5.6%
Rating: Strong Buy
VICI Gaming (VICI)
Sector: Gaming
P/FFO: 14.1x
Dividend Yield: 5.4%
Rating: Strong Buy
I own shares in SKT, SPG, MPW, and VICI