There’s a lot to be said for planning, which is the bottom line message Thomas Frank, pictured above, offers. His plan to save $900,000 by the time he’s 40 could work, assuming the stock market doesn’t collapse, the U.S. dollar retains its value, and assuming there’s no Civil War Two. There’s a lot of assuming, which can make an ass of us, but we do have to make assumptions in order to go about living.
My take on the linked article from Business Insider is that it’s intended to push young white American males into “investing” (gambling?) in the stock market. It should be read as a promo for Wall Street. After all BI is a website that is owned by a Jew who promotes Wall Street and its values.
However, the emphasis on saving expressed in this article worked for me. I maxed out my contributions to retirement funds for 25 years, plus as a college professor I was able to write books and earn money from that endeavor, money that went into savings.
Now, due to some astute financial planning, most of my savings are earning a 4 percent return in a zero interest rate world. What I’m worried about is the collapse of the U.S. banking and insurance system, which is being propped up by the “quantitative easing” (money printing) that appears to be endless. Aggressive U.S. wars also are forcing the world to take our excess dollars, thus avoiding hyperinflation or some other calamity.
How long can the present unstable equilibrium continue? I don’t know and that’s the problem.
Condensed by Paladin Justice from Business Insider
Before he graduated from Iowa State University in 2013, Frank started an online business that generated enough income to pay off nearly $15,000 in student loan debt. He graduated debt-free.
Today, he still runs that business, College Info Geek, which gives college students information about being more productive, getting better grades, landing their dream jobs and graduating without debt. In addition to blogging, Frank hosts “The College Info Geek” podcast and the “Listen Money Matters” podcast.
Frank is aiming to “retire” by age 40, although his vision of retirement doesn’t include shuffleboard and rocking chairs. Instead, he hopes to have enough saved to finance his life without needing income from work.
“It’s not so much that I don’t want to work anymore, but I want to get to the point where, permanently, I’ve built up enough savings that it can provide a living for me and my family. I want to continue creating value,” he says.
In college, Frank began reading personal finance books. One of his inspirations was J.D. Roth, a financial blogger and author of “Your Money: The Missing Manual.”
He also saw family members who were attempting to invest but pulled out of the market in the 2008 financial crisis. “Over years and years, they had nothing to show for it, so I came to this realization that I had to sock money away and not touch it,” he says.
During his sophomore year of college, Frank opened an account at Vanguard with $1,000 and began saving.
In late 2013, he opened what’s known as a SIMPLE individual retirement account. SIMPLE stands for Savings Incentive Match Plan for Employees. The accounts are popular with small-business owners whose companies do not sponsor any other retirement plans. As a business owner, Frank is eligible to contribute to this type of plan.
These days, Frank strives to contribute $1,000 per month to his taxable Vanguard account, which includes a Standard & Poor’s 500 index fund and an index fund that invests in real estate investment trusts. He has about $11,500 in that account.
In his SIMPLE IRA, Frank invests in the Fidelity Advisor New Insights Fund, a large-cap growth fund, and the Virtus Emerging Markets Opportunities Fund. Both were recommended by his financial advisor.
He has about $19,000 in his SIMPLE IRA. Because he is saving to cover living expenses at age 40, Frank must save a portion of his money outside a qualified retirement account, which carries penalties for withdrawals before age 59½.
Frank’s goal is to save $900,000 by age 40. To make that happen, he wants to invest $25,000 per year, in today’s dollars. Along with that, he is working to increase his income to $90,000 per year. He acknowledges that he may have to stash away more money as he grows older, but hopes to front-load as much as possible to take advantage of compounding.
Another key is envisioning his future self, an exercise that’s generally difficult for people of all ages. For example, he contemplates not only having children to support someday, but other scenarios, such as caring for elderly parents or not being able to work.
“I want to be like Batman. He’s got a plan for everything,” Frank says.
Although he is saving steadily and has clear goals, Frank says his lifestyle is not as frugal as what’s advocated by some bloggers, such as the pseudonymous Mr. Money Mustache, an engineer who retired at age 30.
“If I asked myself honestly, I could be a little bit better, because I tend to spend more than I need to on eating out and things like that,” Frank says. “But as long as I’m hitting my savings goals, the spending is not a huge issue.”
