Money has always been considered a numbers game, an intricate dance of arithmetic and instincts. The most affluent figures we know didn't build their empires solely from savings; they leveraged others' money, minimizing costs, maximizing returns, and reaping tax benefits.
Consider the tale of Harry, a 22-year-old, fresh to the challenges of adult financial life. When a pay rise nudged him into a new tax bracket, he was puzzled. With a modest saving of $12,000 and a monthly contribution plan of $300, Harry's ambition was to fully own his house by 30. Though the feasibility of that dream was uncertain, he was introduced to strategies to maximize his investments. By leveraging his savings and investing consistently, even if it was just quarterly, he was introduced to the wonders of dollar-cost averaging.
Interestingly, Harry's journey coincided with the tumultuous 90s. The stock market was inconsistent, buffeted by events like the Gulf War and banking crashes. Yet, his strategy insulated him from these rollercoaster fluctuations. When he consistently invested, regardless of the market highs or lows, he ensured that his average investment cost remained optimal.
Fast forward six years: Harry, at 28, and his partner made a move on a house priced at a modest $150,000. Cashing out his investments, he had a remarkable $87,000 to his name. Despite a lukewarm stock market performance over the period, Harry had nearly tripled his money. Two years later, combining their finances, the couple were able to fully pay off their house.
He attained is goal of owning an unencumbered home by age 30.
Harry's tale isn't just about numbers; it's about wisdom. He realized that making money wasn't about predicting market movements but about endurance. By seeking informed advice, using tax refunds, and generating investment income, he turned the tables on the traditional narrative.
In essence, it's not about the timing of the market but time *in* the market. Harry's story underscores a golden truth: with informed decisions, proper strategies, and persistence, you can reduce your borrowing costs and let your investments do the heavy lifting. The journey to financial success might be dotted with uncertainties, but with the right guidance, it's a ride worth taking.
Posted in Insight Money at 19 September 23