How to become a millionaire.

[jd4320t]

It would be next to impossible to quantify but what about gifts given before death or a child given a free education by their parents vs one who took out loans? I'd like to buy my daughters first house. It's not inheritance but it sure as hell would make it easier for her to amass wealth without a 30 year mortgage than with. The purpose of the gift would be so that it does set her up better for later in life. If she proves to be too irresponsible to handle it like the person GFGT is referring to, I won't buy the house.

I'd say gifts given before death are like an early inheritance. I also plan to help my daughter with her first home after college. I want to do all the things my mother didn't do for me and my sister.

 

[hornadylnl]

I'd say gifts given before death is like an early inheritance. I also plan to help my daughter with her first home after college. I want to do all the things my mother didn't do for me and my sister.

It is an early inheritance, I'm just wondering those cases are included in HD's statistic. Typically, most people receive an inheritance when it's least likely to do them the most good.

A typical mortgage costs double the purchase price after interest. If you give $100,000 for a house now, it has the effect of giving $200,000 because they don't have to **** away $100,000 in interest.

 

[GodFearinGunTotin]

My kids (or grandkids) will get whatever is leftover when I die. I'm a firm believer you appreciate it more if you earned it and a house is no different. I'll help them along the way--fixing stuff, showing them how stuff works, etc. But both have bought their own first cars and pay for the insurance and repair bills. I'm going to allow them to do that with their homes as well.

 

[hornadylnl]

My kids (or grandkids) will get whatever is leftover when I die. I'm a firm believer you appreciate it more if you earned it and a house is no different. I'll help them along the way--fixing stuff, showing them how stuff works, etc. But both have bought their own first cars and pay for the insurance and repair bills. I'm going to allow them to do that with their homes as well.

I think it depends on the child. If my daughter won't appreciate it and use it to her advantage then I won't do it. If she uses it as an opportunity to build wealth, I will.

 

[jd4320t]

I think it depends on the child. If my daughter won't appreciate it and use it to her advantage then I won't do it. If she uses it as an opportunity to build wealth, I will.

That's how I am. I've already told mine she won't be getting everything for nothing. I will help her and get her started right.

 

[Leo]

I have been around families, specifically South Holland, Illinois and a few in Griffith, Indiana that have a culture of not saving inheritance for death, but start when the kids become adults. They help them set up a business, paying a lot if not all the start up costs. The business could be construction, it could be retail, it could be transportation, whatevery it seems like the kid could do well. Then they closely monitor things for a few years to make sure the new businesses stay on the right track. Maybe hire a consultant or an advertizing agency. By the time the kids are 30-35, they have well established businesses and have pretty sound methods. The parents live out their golden years without having dead beat kids mooching off of them. Those who have no interest in business get a college education. Then they open CPA firms or dentist offices, etc. This seems to work pretty well.

I used to date a gal that got a cash inheritance when she was maybe 20 years old. She spent it all the 1st month on a great vacation and a new, snazzy car. Two months later, she was out drinking and nearly totaled it. The inheritance money was gone, she had no education and no career, and a patched up car that was never really right again. Without instruction, inheriting money may not give a person much advantage.

"for lack of wisdom, my people perish"

 

[CountryBoy19]

28% will take loans from their 401k on a regular basis.

A 401k loan isn't necessarily bad. It's a tool in the tool-box. All tools can be used to build things up, or tear things down. It's all in the hands of the user, literally.

Reading this thread reminded me of a quite common saying that has continually resounded with me and my lifestyle. Rich people live like they're poor and poor people live like they're rich. Of course there are exceptions to that, but in general it holds true to a LOT of people. I have a new neighbor that has 3 new vehicles (within a couple years old), yet they had to have financial assistance from dad to build their new home. Uh, hello, stop buying a new car every single year and you might be able to afford to build a house instead... Financially they seem very poor, but looking at them you would think they're rich. IE, they're living like they're rich, but they are actually poor.

 

[hoosierdoc]

Reading this thread reminded me of a quite common saying that has continually resounded with me and my lifestyle. Rich people live like they're poor and poor people live like they're rich. Of course there are exceptions to that, but in general it holds true to a LOT of people.

Big hat, no cattle

Everyone should read "The Millionaire Next Door". Great read.

 

[D-Ric902]

How to become a millionaire in America today.

start with a billion dollars.........

 

[bkeesler]

I just keep hoping to find a suitcase of money on the street.

 

[CHCRandy]

I think we could all be millionaires if we would just have saved $100 a month from the day we turned 18. These prices are from 2013....so they would be much higher today, I think.


In 1985, if you chose to invest $200 in Best Buy Stock, instead of splurging on a Sony Walkman for the same price, you would have $36,343 today.

In 1986, the revolutionary Microsoft Windows 2.0 sold for $100. But if you’d put the money directly into company stock instead, today you’d have $11,480


In 1990, Apple peddled the Macintosh Classic for $1,500. That much cash in Apple stock would have earned you $98,606 today.

In 1984, a high-end riding lawn mower from Home Depot would have set you back $2,595. A better idea would have been to put that money in stocks and walk away with $699,199 today.

In 1982, you could have ruled the roads in a $6,572 Ford Mustang. A savvier spender would have put that money into Ford itself, and walked away with $314,433 today.

 

[hornadylnl]

I have been around families, specifically South Holland, Illinois and a few in Griffith, Indiana that have a culture of not saving inheritance for death, but start when the kids become adults. They help them set up a business, paying a lot if not all the start up costs. The business could be construction, it could be retail, it could be transportation, whatevery it seems like the kid could do well. Then they closely monitor things for a few years to make sure the new businesses stay on the right track. Maybe hire a consultant or an advertizing agency. By the time the kids are 30-35, they have well established businesses and have pretty sound methods. The parents live out their golden years without having dead beat kids mooching off of them. Those who have no interest in business get a college education. Then they open CPA firms or dentist offices, etc. This seems to work pretty well.

I used to date a gal that got a cash inheritance when she was maybe 20 years old. She spent it all the 1st month on a great vacation and a new, snazzy car. Two months later, she was out drinking and nearly totaled it. The inheritance money was gone, she had no education and no career, and a patched up car that was never really right again. Without instruction, inheriting money may not give a person much advantage.

"for lack of wisdom, my people perish"

That's essentially what happens when a family passes down the "family business". Not a thing wrong with that.

My grandparents were farmers and didn't live a life of luxury at all. In fact, they had it damned hard for the greater part of their lives. With increased land prices, they were millionaires with assets before they died. They always joked that they were spending their kids' inheritances and their kids fully expected that to happen. One day, my grandmother told one of her kids about how much to inspect as an inheritance. The kid said they didn't deserve it and my grandma said that the labor of their kids helped to build that farm into what it was.

Same thing with the family business.

 

[smokingman]

I think we could all be millionaires if we would just have saved $100 a month from the day we turned 18. These prices are from 2013....so they would be much higher today, I think.


In 1985, if you chose to invest $200 in Best Buy Stock, instead of splurging on a Sony Walkman for the same price, you would have $36,343 today.

In 1986, the revolutionary Microsoft Windows 2.0 sold for $100. But if you’d put the money directly into company stock instead, today you’d have $11,480


In 1990, Apple peddled the Macintosh Classic for $1,500. That much cash in Apple stock would have earned you $98,606 today.

In 1984, a high-end riding lawn mower from Home Depot would have set you back $2,595. A better idea would have been to put that money in stocks and walk away with $699,199 today.

In 1982, you could have ruled the roads in a $6,572 Ford Mustang. A savvier spender would have put that money into Ford itself, and walked away with $314,433 today.

This is actually not true.It is a math gimmick.
February 17,1984 Ford stock was $39.50 meaning you could buy 166 shares.
Those same shares are now worth $16.23
You would earn dividends when Ford paid them(I have the full payout chart below).
The first year you would have earned a 9 cent dividend times 166 shares=$14.94 not enough to buy another share,but dividends did have a 15% tax in 1984,so you made $12.7,less the money you paid the broker to buy the stock.

I used a dividend Reinvestment calculator(http://www.buyupside.com/calculators/dividendreinvestmentdec07.htm)with an average of .28 cents per year dividend(generous considering the chart) with zero grow.Total earned $8044.36
Mind you that is paying zero taxes,and reinvesting every dividend back into the stock.

Your initial investment was $6572
Your portfolio would have grown in shares,to 191(*Edit I found a math error,you would have 203 shares in 2015,not enough of a difference to recalculate everything though) at 16.23 per share,you have a current worth of 3099.93 in stock(you have lost 3473 of your original investment in the stock)+your 8044.36 in dividends.
For a grand total of $4571.36 total profit(less your original investment,and the lost value of the stock).

So how do investment advisers come up with such unrealistic numbers?
Easy,the calculator they use does not allow for you to lose money.The stock price can not go down,and they figure in an annual dividend and stock growth rate usually around 6-8%,and they charge no fees or taxes when showing you how much you could have made "if" or how much you stand to make if you buy Blaaa blaa stock(mutual fund ect)from them today."In ten years you will triple your money,you would be stupid to not invest!"



No one who purchased 166 shares of Ford in 1984 made the money your figure claims(sorry I did not use 1982,I misread it and am not doing the math over),in 32 years you made a profit of $4571.36 and would have done much better in a savings account.

Point being.That statement,and the ones above it are most likely false.


Historical Stock price and Dividend paid for Ford.
F Historical Prices | Ford Motor Company Common Stock Stock - Yahoo! Finance

 

[looney2ns]

Back when Peabody coal was going big. Employee's were working 7 days a week for years on end. Lots of overtime at a very very good hourly wage. Most of those same employees were hurting big time if they went out on strike and it lasted more than 2 weeks. Ugh.

I did not help my 4 kids with their first anything. I think you are missing a great teaching experience for them by doing otherwise.
All of them now well into adult hood, and doing very well.

I used to run a business that hired many kids for their first job. It was very clear that the kids that mom and dad gave them everything did not appreciate it in the least.

Teach them about money and saving at an early wage, make it a habit.

Most people do not "need" that $150-$200 per month cell phone bill nor that $200 per month cable/internet bill.

I suspect Dave Ramsey's message hits home or should hit with many more people then the educated investors believe in this thread.

401K loans for the average Joe is stupid.

 

[CHCRandy]

This is actually not true.It is a math gimmick.
February 17,1984 Ford stock was $39.50 meaning you could buy 166 shares.

I don't know where you got that number but on February 17, 1984 Ford stock closed at $2.30, or 2857 shares, them 2857 shares are

46,965.43 shares today!​

You are also not taking into your numbers the number of splits over the years.....you would have 8-10 times as many shares as you started with...and then .40 dividend per share over all them years. Historical Stock Prices | Ford.com Investment Calculator | Ford.com

 

[smokingman]

I don't know where you got that number but on February 17, 1984 Ford stock closed at $2.30, or 2857 shares, them 2857 shares are

46,965.43 shares today!​

You are also not taking into your numbers the number of splits over the years.....you would have 8-10 times as many shares as you started with...and then .40 dividend per share over all them years. Historical Stock Prices | Ford.com Investment Calculator | Ford.com

I see the price discrepancy.It is not just in one place either.The DOW site has Ford shares at .81 in Feb 1982,Yahoo finance has them at 39.50,Ford has them at $2.30.

That said even using Fords investment calculator and putting in your original 6572 in Feb 1982 it says you have 9056 shares now for a total of $146,958.A little less than half your original figure,and still does not include taxes and management fees(a 1% a year fee taken out of dividends would cut that figure almost in half again which is how most people pay fees on 401k and retirement plans).If you had sold in 2008,when Ford shares where $5.10 you would have made $46185 by Fords calculator.
That is the other thing about stocks and investing.You have not made anything until you get it out,which is very hard emotionally for most normal people.

 

[CHCRandy]

I see the price discrepancy.It is not just in one place either.The DOW site has Ford shares at .81 in Feb 1982,Yahoo finance has them at 39.50,Ford has them at $2.30.

That said even using Fords investment calculator and putting in your original 6572 in Feb 1982 it says you have 9056 shares now for a total of $146,958.A little less than half your original figure,and still does not include taxes and management fees(a 1% a year fee taken out of dividends would cut that figure almost in half again which is how most people pay fees on 401k and retirement plans).If you had sold in 2008,when Ford shares where $5.10 you would have made $46185 by Fords calculator.
That is the other thing about stocks and investing.You have not made anything until you get it out,which is very hard emotionally for most normal people.

You can't enter it the way you are saying. Go to the Ford investment calculator and enter 2857 shares on Feb. 17, 1984 and delete the 10000, then hit enter. There was 4 splits in the 80's and 90's, a 3/2, 3/2, a 2/1 and a 2/1 plus in August of 2000 they gave the "new" stock to old stock holders which gave you 1.75 shares of new stock for every share of old, that makes it over 49,000 shares, without dividends. Plus other spinoffs. 2857 shares then would be over 49,000 shares banked today.

Just for the record....the quote we are talking about were not my figures....they came from some Forbes writer in his article written in 2013 when Ford stock was around $12-13 a share.

Edit: Just noticed the article said in 1982, so that means there was another 2/1 stock split I added in.

 

[hoosierdoc]

This is actually not true.It is a math gimmick.
February 17,1984 Ford stock was $39.50 meaning you could buy 166 shares.
Those same shares are now worth $16.23

Historical Stock price and Dividend paid for Ford.
F Historical Prices | Ford Motor Company Common Stock Stock - Yahoo! Finance

My data is showing $2.33 for closing date 2/27/1984. There have been four stock split for Ford since 1984.

Edit, didn't finish thread (again)

 

[Kirk Freeman]

you CAN become wealthy from working and saving.

"Pay yourself first" is what my father always said, well, he still does.

To this day, the first check I sign on Friday is to the SEP. The staff calls them the "future Kirk checks".

 

[CHCRandy]

Kirk, I sure wish my dad had taught me that lesson....he told me to pay myself first but never mentioned investing it. He always thought that investing was for rich people.....if you make it, spend it mentality. I lived like a rock star until I hit about 40-45, a few years ago....I now understand what they meant. It is a lot easier to save $100 a month compared to $700.....to have the same outcome. If these young people would just put back $100 a month in a fund....and forget about it, they would all be retired millionaires at 59 1/2.

Wish I had invested my money in Ford stock instead of that pos 1980 Mustang I bought, that was always breaking down.