By Robert Stitt
In this book, Bach makes a few bold claims. The one that is the most over-the-top is “Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan.”
Bach then declares,”You don’t need to have money to make money. You just need to make the right decisions — and act on them.”
There is no denying the math behind the “start early, invest early” philosophy; however, the theory does indeed require money.
Bach created a chart showing how much money you would have to invest each day, month, and year if you started investing at various ages and wanted to have $1 million saved by the time you turned 65. The chart shows the power of compounding and demonstrates that you have to invest less if you start earlier.
A few of the number from the chart are:
Starting Age, Savings Daily, Savings Monthly, Savings Annually:
20 $2 $61 $730
30 $6.35 $193 $2317
40 $20.55 $625 $7500
50 $73.49 $2,235 $26,824
The chart makes several assumptions:
- You will have the money to invest every day, month, and year up until the age of 65.
- You start with a $0 investment.
- You will be able to earn a 12 percent annual return on your money every year.
- Tax considerations are not factored in.
- You don’t dip into your savings before you turn 65.
Bach suggests that you start by ensuring you are contributing to your 401K and a Roth IRA. He also suggests finding little items to eliminate in your life to make a big difference for your future, such as the daily $4 coffee.
On the positive side, Bach shows that it is possible and reasonable to retire as a millionaire under the right circumstances, and, even if you didn’t start early or ran into some trouble along the way, there is still an opportunity for you to recover. On the flip side, you are going to need some good savings habits and a way to pull off a 12 percent annual return, which isn’t always an easy task.