You May Already Be a Future Millionaire | Series 1.4

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Welcome to the Enjoy More 30s: Family Finance

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podcast, the only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us, stress us out and distract our focus

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from simply enjoying life.

Joseph Okaly: 00:00:17

Hi, and welcome to the fourth episode in the

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initial "Your Money Mindset" series here on the Enjoy More

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Family Finance podcast. Today's episode is titled, "You

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May Already Be a Future Millionaire". What you need to

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know about your existing investments, and what you can do

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about where they are headed today. So packing for little

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kids when you go on vacation, now in my house at least, Lauren

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does 99.9% of the packing- she is fantastic. If I were to take

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.01 percent of the credit for that, I'd probably be

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overshooting my contribution by a little bit there. My

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involvement comes really more at the end. We review everything

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that we're bringing, because I tend to do more of, you know,

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the carrying of the bags. And I'd rather carry 10 heavy bags

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and not be missing something that would prevent a child

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melting down and screaming their heads off in public. However, I

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also don't want to carry more heavy bags than I need to. Which

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in my opinion, at least, I think is pretty fair.

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So what you need to know. Saving enough, sure, of course is the

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first priority. We want you to hit retirement goals. We want

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you to hit education goals. We want you to be able to do all

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these things. But we also don't want you to save too much, as

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strange as that may sound, because it may limit today's

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enjoyment. Maybe you want a pool, maybe you want to go to

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Disney more. There are a million things that I'm sure you want to

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do that at times you've said 'I can't do that' because I'm

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saving over here or I want to make sure that I'm on the right

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track. When we project where your investments are going, it

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gives you an idea of where you're at, and you may be

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surprised that you've been doing a better job saving than you've

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realized. When we sit down with young clients who've been doing

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a good job saving up to this point, and we look at their

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projections, we have software that we're putting in their

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investments, what they're saving, what they're living on-

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their whole situation. And we can project it out 20 years, 30

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years, and we can show them exactly what track they're on.

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And by doing that, it's so freeing for them. It allows them

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to see what direction they're heading. It allows them to see,

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"Is there a chance I could retire early?" Does it allow

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them to see, "Okay, so if I took an extra $200 a month and did

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something with, or $10,000 one time to do an improvement to my

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home or a big trip, how would that affect my long term

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projections?" And this way they know the decisions that they're

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making, it's an educated decision. This is a much better

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way to go about it because you know what you're putting where,

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and how that affects you overall. The really remarkable

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thing about being young is that we have time on our side- it's

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the biggest advantage when it comes to investments and where

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we're projecting. If you're about to retire, wherever you

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are today, that's pretty much where you're gonna be tomorrow.

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If you're 30 years out, that makes a world of difference, and

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it makes the calculation more difficult. But if you do the

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calculation, it can really help give you an idea of what dir

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ction you're heading on, and giv you an ability to have a mor

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educated today for when you re making decisions.

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So what can you do? The first thing is you want to try to get

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some idea of what track you're on. You want to discuss with

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your spouse what you guys are trying to accomplish, and

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whenever you do figure out what track, how do you want to

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adjust? Do you want to try to keep saving the amount that

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you're saving so you can retire early? Are you okay with an age

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65 or 67 retirement and you'd rather do more stuff today?

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There's no right or wrong, but once you know the track you're

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on and that flexibility that you may or may not have, having that

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conversation with your spouse for what you want to do with

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that flexibility is super important. So one way to get a

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very quick idea of kind of where you're headed if you don't have

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an advisor that can do this kind of projection for you, then you

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want to really get a quick idea, there are some limited tools

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that you can use.

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The rule of 72 is a concept that you can look up online and get

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more details on, but it gives you a way to kind of know how

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quickly it's going to take for your money to double. Now using

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this, let's assume that you have a portfolio that's very well

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allocated, it's spread out, it's diversified- all terms we're

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going to go through in later episodes. And a 7% return,

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excuse me, is a fair estimate that you could be using. That

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would mean that your money is going to double according to the

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rule of 72 roughly every 10 years. Let's say that right now

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you have $150,000 saved up. That means in 10 years from now,

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you're going to have $300,000 according to this. 20 years from

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now, you're going to have $600,000 because that 300 would

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double on itself. That's how you see that power. So in 10 years,

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that first 10 years, you gained 150. 150 doubled goes to 300, so

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you gained 150. That next 10 years, so same period of time,

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but now you gained 300 because that 300 doubled- so now you're

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at 600. Now this last 10 years here, if we're doing a 30 year

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evaluation because we're a young family, now you're at 1.2

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million because that 600 doubled again. That's the power of time.

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So this rule of 72 can give you some idea of what direction

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you're heading in based on what you have today. It's not going

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to be able to build in your contributions or matching

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amounts, things of that nature. But if you can get some idea of

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where you're headed, the point is now you can do a better job

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of making decisions today. Whether you want that to be with

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an advisor, whether or not you want to do that through

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yourself, you can look at the rule 72 in more detail. But if

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you can give yourself some idea of what direction that you're

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heading, then that is really, really something that can be

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helpful for you long term.

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Again, like we talked about earlier in other episodes, we

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don't want to just be checking boxes. And we don't want to just

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be doing things to do them because sometimes, or a lot of

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the time, that doesn't remove the anxiety. You could be

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putting $10,000, $20,000 a year into your 401(k), but if you

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have no idea where that's going to end up- will you be able to

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retire at 50, 55, 65- you're going in a good direction, but

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you're kind of going in that direction a little bit blind.

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The more that we can get clarity on what direction we're going

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into, that allows us to make more educated decisions again

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today.

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So again, as a quick summary of what we went through here, you

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may be on a better path today than what you may realize. May

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say $150,000 in your account right now, but if you're

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diversified and spread out well, that could already mean you're

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on a track for what you have today to be a million dollars or

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more. Now this may not be enough for you to actually retire on,

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which may sound weird. Millionaire sounds like, "Oh, I

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have more than enough." But to last an entire retirement, you

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may need more than that, depending on what your situation

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is, obviously. But it gives you an idea of you may be further

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along than what you think. The second point is, once you do

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realize this, have that conversation with your spouse.

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If you do have extra flexibility, for what do we want

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to do instead? What should we do instead? Maybe one person wants

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to retire early, another person would rather take more

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vacations. So it's important to have those conversations if you

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do have that extra flexibility- what do we want to do with it?

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As always, thanks for tuning in today. If you enjoy the episode,

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please make sure to review us on Apple podcasts or wherever you

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listen. There are literally millions of young American

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families out there I'm trying to reach and help just like you.

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Additionally, the next episode coming up in the "Your Money

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Mindset" series is titled, "18 Summers With Kids". We're going

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to go through and focus on why it's so important to make the

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most of our time now. And it's kind of an extension on today's

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episode- if we do have some extra funds and resources, we

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want to make sure that we're doing the most with them because

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the time that we have with our kids is more fleeting than we

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think. Thanks very much as always for tuning in and looking

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forward to talking with you again soon.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal tax or other

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professional advice for your specific situation. You should

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always seek appropriate advice from a financial advisor,

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accountant, lawyer or other professional before acting upon

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any content or information found here first. Joe is affiliated

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with New Horizons Wealth Management LLC, a branch office

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of TFS securities Inc, and TFS advisory services and sec

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registered investment advisor member FINRA/SIPC.