Post of the Day
May 4, 1998

From our
You Have More Than You Think Board


Subject: The Missing Chapter: EARN !!
Author: Dominicus

Reading "You Have More Than You Think" was superb. It transformed me from a Wise man with still $8,000 of available credit line, to a Fool with $5,000 of credit card weight holding me back from the wonderful world of stock investing opportunity. But a Fool has to keep the humor. It'll be a pleasure taking that 19% return away from my lender.

The three most appreciated Foolish lessons were: get rid of your debt, save systematically, and invest in the stock market. It's comforting to know we don't have to spend too much time worrying about the market to get better-than-average returns. But with all this free time, we can't help it but to crash on this new hobby of investment knowledge. Now the stress comes not from the ups and downs of the Dow, but from our idle modems waiting to get into The Motley Fool website!

Now here are my 2 cents of advice that may not be so obvious from reading the book. Once you find the courage to dispel your debt, have a life with your loved ones, and are on your merry way of systematic savings, invest any time left getting better at whatever you do, and EARN MORE MONEY. Whether you work for somebody, or are self-employed, increasing your earnings now and consistently in the future, while maintaining your savings strategy, will bring even better rewards than trying to get an extra 2% in market returns by researching like hell. Let's do some simple math, like our loved authors like to do, with these two hypothetical scenarios:
Hey, just don't forget that advancing in life is not only about getting smashing returns year in and year out. Better earnings will improve your opportunities dramatically, bring better quality of life to your loved ones, and give you the flexibility to shoot your savings to the roof!  
Tom and Sally both earn $40,000 today and systematically invest 10% of their salary month by month. As a Fool fanatic, Tom spends considerable time getting to know his companies and gets 15% annual growth investing in common stocks. He cares about his job, so his boss increases his salary 4% every year. Sally invests mostly in an Index Fund, with some percentage in a Foolish Four portfolio. This simple strategy gives her 13% annual growth and plenty of spare time. She invests this time improving her knowledge and skills to do a better job in the office. Her employer consistently rewards her excellence with a 10% annual pay raise.

Run these numbers, and you'll see that market-dusting Tom earns some respect with $104,300 in his portfolio after 10 years, while hard-working Sally get real kudos massaging $116,600. Well, Sally did just a little better, heh? You'll wonder what's so great about this example, since Sally burnt her butt at work just to get an extra $12,300 into her portfolio. The big difference is that Sally earns $94,300 after 10 years. With this virtue, she probably could have increased her earnings contributions to 15% on her sixth year, rocketing the bottom line to $143,500, while Tom is still struggling, trying to cope with inflation and a $56,900 salary.

Hey, just don't forget that advancing in life is not only about getting smashing returns year in and year out. Better earnings will improve your opportunities dramatically, bring better quality of life to your loved ones, and give you the flexibility to shoot your savings to the roof!

Many of my friends are just now turning into Total Fools, spending their lunch time in constant Foolish chat about their savings strategy�savoring the rewards of a debt-free future of compounded growth. I like to tag along�anyway, I'm the only one who doesn't give a damn about market volatility�hell, investing in my own debt is giving me constant, market-beating returns!

Dominicus


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