Investment Rocket Fuel

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We are back from the short break folks, and yes Mexico was fun. Also, I hope you had a great memorial day weekend (thank you to those who have served).

I finally got to get back on the water and do some much-needed fishing with family and friends.

Over the short vacation and holiday weekend I did some thinking on how to accelerate your investments. After running some numbers, it became clear there is one thing that is truly rocket fuel for your investments.

Let’s talk about it 🤝 

Quote

“Successful investing is simple, but, boy oh boy, it ain't easy.” - Jim O'Shaughnessy

Investment Rocket Fuel

We give a lot of credit to dividends, passive income, and the power of compounding in this email.

While it’s great to slowly reinvest your dividends and see that snowball grow, with a little boost one can add thousands, if not millions, of dollars to their net worth over the long run.

Investing monthly is great, but investing more every month is better.

Most people focus strictly on investments, and that’s awesome, but the potential for increasing your income should never be ignored.

Investing Alone

To set the stage for this example let’s introduce our main character. Meet Buffett Jr. He is 30 years old and works a typical 9-5 that pays him $70,000. That comes out to approximately $4,700 a month after taxes in Texas.

Buffett Jr. has his financial plan figured out. Thanks to a healthy emergency fund, he invests $1,200 a month, aka 25% of his income. His investments generate a 7% annual return on average over his lifetime.

Over the next 30 years, this plan of attack would allow Buffett Jr. to stack up 1.4 million dollars for retirement. Not bad.

Investing + Side Hustle

What you didn’t know though was that Buffett Jr. played college baseball and was one of the best hitters in his division. Since graduating college though, his baseball skill has been left to slowly rot away into history.

One day he gets an idea. He realizes his knowledge of hitting bombs shouldn’t be taken for granted. Buffett Jr. decides to start giving private hitting lessons for the local jr high and high school players in the area. He decides to charge $100/person for a one-hour hitting session and is able to do 10 of these a month after work or on the weekends.

With this side hustle, he is able to stack another $1000 a month. He decides to keep $250 for himself and invest the other $750 each month.

To keep the math simple we will assume this remains constant over 30 years, when in reality Buffett Jr could try a different side hustle, get a raise at work, increase his prices, or quit altogether. Who knows, a lot can change in 30 years. As mentioned earlier, this is just an example.

Thanks to the extra $750 going to his investments every month he has the potential to grow his investment account to almost 2.3 million dollars.

Strategies to Bank

With this (simple) example it’s easy to see how adding some extra income each month can result in a seven-figure difference in net worth at retirement.

What should you do to generate that extra income? Well, the answer is going to depend on your experience and skills. It might be as simple as trying to get a raise at work, as not everyone can jack bombs like Buffett Jr.

If you’d like to get a few quick ideas here is a recent write-up I did on Not So Normal Business Ideas.

Conclusion

You might be able to make more than this each month, or just a fraction. Whatever the amount, being able to increase your investments is the fastest way to accelerate that magical phenomenon we call compounding.

When I looked at these numbers, I realized that while it’s awesome to invest as much as possible, it’s equally important to focus on increasing your income.

So keep investing, but don’t discount making a bit more bread. ~ Cade

Cade's Finds

Salary Increase Calculator - Link to a more advanced investing calculator that takes into account salary increase and 401k match.

The Liabilities of Success - The unseen liabilities of success and why you should consider what you have to give up before you embark on a new project.

Best Memes

Zuck is THAT guy.

If I had a dollar for every AI thread I’ve seen in the last month.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.