Love, love, love this lesson.  In Lesson 7, Retirement and College Planning, people start to see how it’s possible to build crazy, family-tree-changing wealth if you do what Dave Ramsey teaches.

Retirement:College Planning

Did you know that you have what it takes to be a millionaire?!

If you, yes YOU, diligently save 15% of your income for your retirement over the course of 30-40 years, you’d have to invest in something silly like gold or cotton to NOT become a millionaire!

You don’t have to be a rock star, athlete, doctor, lawyer, or know the “secrets of the rich” to make this happen.  You just need to start, and start now.

Dave opens the lesson by giving two examples of a 30-year-old couple who maxes out their Roth IRA and 401(k) and ends up saving nearly ten million dollars and seven million dollars, respectively.  WOW!

This assumes a 12% rate of return, and no investment advisor will quote you that much.  Even so, I’ll take half of ten million dollars!  For the record, Nancy and I are invested in multiple funds that have averaged 11-12% average annual return over their 30-70 year lifespan.

A couple of things to keep in mind with your investing:

Don’t buy things you don’t understand 
As soon as an adviser starts talking over your head and tries to get you into some sort of variable annuity and doesn’t explain what that is or how that works, stop.  Step back, and make sure you understand the full picture (and do your research) before investing in something.  I don’t necessarily have something against variable annuities (aside from maybe their high fees), but they can be difficult to understand.

– Keep a long-term perspective
Gold has been the hottest thing going for the last 3-5 years.  But long term?  It’s awful.  The value of gold, over the long term, stays up with inflation.  If you want to gamble, it’s great, but if you want better chances for long-term sustained growth, stick to things with proven, long track records.

That also goes for how we handle ups and downs in the stock market.  Watching the news reports, or specific stocks, throughout the day will make you sick with all the ups and downs.  I know people who lost quite a bit of money in the stock market because they pulled their money out when the market was down in 2008.  If they had kept the money in, they would have made all of it back plus some.  Keep a long-term perspective.

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I’ll have to write an entirely separate post about planning for college, because student loans are becoming an epidemic.  I completely agree with what Rachel Cruze (Dave Ramsey’s daughter) said last night when she said, “Student Loans are the roadblock of this generation of students.”

The words “I can’t afford it” rarely enter into discussions about where a student is going to go to college.  This has to change.

For now, let’s get out of debt so we can focus on investing with purpose and make that happen!  Go be a millionaire!

Question: What’s the most confusing thing to you about investing?