Welcome back to the deep dive.
You guys seem really interested in this idea
of retiring a millionaire,
even if you're on like a modest income.
Yeah, it's definitely something
a lot of people are thinking about.
For sure.
So we're gonna kind of dig into that today.
And you guys sent in some good resources for this deep dive.
Yeah.
We're gonna be looking at this YouTube video
by Joshua Mayo called,
How to retire a millionaire on a low salary?
Oh.
Key title.
Yeah.
And then also we'll be looking at this
just fascinating story of Ronald Reed.
Yeah, I love that story.
This guy was a janitor and a gas station attendant.
And secretly amassed an $8 million fortune.
Yeah, it's crazy.
So we're gonna kind of look at all of that today.
So buckle up, it should be a fun one.
That's good.
Okay, so let's start with this Ronald Reed guy
because his story is just like mind blowing.
Yeah.
So this guy, like I said, was a janitor.
He was a gas station attendant.
Right.
And he lived a super modest life in Vermont.
Like how modest are we talking?
Like collecting stamps, driving a used Toyota Yaris,
having breakfast at Friendly's, kind of modest.
Wow.
And when he passed away at 92.
Okay.
His friends and family discovered
that he had an $8 million fortune.
I mean, that's just unbelievable.
How is that even possible?
Right, it really is.
So I mean, I guess the first question is how did he do it?
Well, it really just comes down to the power
of long-term investing and compound growth.
Okay.
Like it's this kind of hidden superpower
most people don't even realize they have.
So he wasn't like winning the lottery or anything?
Oh no, no, no, no.
It was smart, consistent investing over decades.
Wow.
Like he really understood that slow and steady
wins the race when it comes to building wealth.
That's incredible.
I mean, it really makes you think about like
the potential we all have if we make the right choices.
Absolutely.
And that's where Joshua Mayo's blueprint comes in, I think.
He lays out this clear three-part plan for anyone
looking to retire a millionaire even on a low salary.
Perfect.
Okay, let's dive into that blueprint then.
Sounds cool.
So part one is save.
Yeah.
Which seems pretty straightforward.
Yeah.
But what makes Mayo's approach different?
Well, he really emphasizes the importance
of automating your savings.
You know, just take the emotion
and the decision-making out of it.
Yeah.
Or basically paying yourself first
before you even have a chance to spend the money.
So it's more about like building a system
than relying on willpower.
Exactly.
Willpower is, you know, it's limited.
Right.
We're all human.
Holy.
It's easy to get tempted to spend our money, you know.
So automating your savings just kind of takes
that temptation away.
That makes a lot of sense.
Yeah.
So Mayo provides this table in his video breaking down
these weekly savings targets by age to reach
that million dollar goal.
Yeah.
And some of these amounts are surprisingly achievable.
They are, yeah.
Like for example, he says that if you're
in your early 30s,
if you invest just $25 per week,
you could be on track to hit a million by retirement.
It's pretty amazing when you see it laid out like that.
Yeah, $25 a week.
That's less than like a daily latte
at some of these fancy coffee shops.
Exactly right.
Small, consistent contributions can add up big time.
Especially I imagine when you factor in this compounding
thing we're gonna talk about later.
Exactly.
Compounding is key.
But it's important to note obviously, right?
This is like a simplified example.
Sure.
Like market returns can fluctuate, right?
Oh, absolutely.
There's no guarantees when it comes to investing.
Right.
It's not like a guaranteed outcome or anything.
Right.
But I mean still, it does like paint a picture
of what's possible.
For sure.
It gives you a framework to think about.
Yeah, exactly.
And it highlights the importance of starting early too.
No, absolutely.
The more time you have, the more that money can grow.
The earlier the better.
For sure.
Okay.
So let's move on to part two of Mayo's blueprint,
which is invest tax advantaged.
Okay.
And he specifically talks about Roth IRAs.
Yes.
So can you maybe explain why he favors those?
Well, imagine this.
You have this million dollar nest egg.
Okay.
And the IRS can't touch it.
Whoa, okay.
That's the magic of a Roth IRA.
Okay.
So you contribute after tax dollars
and your earnings grow tax free.
Great.
Meaning all those gains are yours to keep in retirement.
So you're not paying taxes on them when you withdraw?
Exactly.
You're not paying taxes on the money going in.
Gotcha.
Okay.
That sounds pretty amazing,
especially when you're talking about like
potentially having a million dollars or more.
Yeah.
I can make a huge difference in the long run.
What were some other key benefits of the Roth IRA?
Well, unlike a traditional IRA,
where you get a tax deduction upfront,
but then you pay taxes on withdrawals in retirement.
With a Roth, you pay taxes now.
While your income is likely lower,
and then you enjoy tax free withdrawals later on.
So it's all about like shifting your tax burden
to a time when you'll likely be in a lower tax bracket.
You got it.
That's brilliant.
I mean, that's really smart.
It's a powerful strategy.
So we don't know the specifics
of Ronald Reed's investment strategy,
but it's probably safe to assume
that smart tax efficient choices like this
played a significant role in his success.
Oh yeah.
I would say that's a pretty safe bet.
Okay.
I'm starting to see how all these pieces
kind of fit together.
Yeah.
Now I'm really intrigued by part three of the blueprint.
Hi.
Which is harness compounding.
Ah, yes.
The magic of compounding.
I've heard the term before,
but honestly it still feels a little bit mysterious.
Yeah, it can be a little hard to grasp at first.
So can you maybe break it down for me?
Like what is it?
Exactly.
So think of it like a snowball rolling downhill gathering,
more and more snow as it goes.
Right.
Compounding is essentially earning returns
on your returns.
Okay.
So the money you invest earns interest
and then that interest earns interest
and so on and so forth,
creating this exponential growth over time.
Okay, so it's not just about how much you invest,
but how long you let it grow.
Exactly.
Time is your biggest ally when it comes to compounding.
Okay.
Mayo actually illustrates this
with a thought provoking question in his video.
He asks, would you rather have $1 million today
or a penny doubling every day for a month?
Hmm.
I don't know about you,
but I'd probably take the million dollars upfront.
Yeah, most people would, right?
Seems like a no brainer.
But here's the kicker,
that penny doubling every day for just a month
would actually result in over $5 million.
Wait, seriously?
It's true.
The math is kind of mind blowing.
It's crazy.
It is.
And that's the power of compounding.
It might seem slow and steady at first,
but the longer your money has to grow,
the more dramatic the results become.
Okay, I think I'm starting to get it.
Good.
What does this tie back to those weekly savings targets
that we talked about earlier?
Right.
So remember that $25 a week example
for someone in their 30s?
Yes.
Well over 40 years,
with an average annual return of 12%,
that consistent investment could potentially grow
to over $1 million.
That's incredible.
So even small amounts consistently invested
can lead to significant wealth
thanks to the power of compounding.
Precisely.
And that's why starting early is so crucial.
The sooner you start, the more time your money has
to work its magic.
Okay, that makes a lot of sense.
Good.
So we're starting to see how saving consistently
in a tax advantaged account
can really help you reach that million dollar goal.
Exactly.
It's all starting to come together.
But now we need to talk about
where to invest those savings to maximize that growth.
Right.
We need to figure out where to put that money to work.
And Mayo is a big advocate for index funds and ETFs.
Yes.
The simple but powerful approach.
So I've heard of these, but honestly,
the whole world of investing can feel a bit intimidating.
Yeah, it can be a lot to take in.
So do I need to become like some kind of Wall Street guru
to make this work?
Not at all.
That's the beauty of index funds and ETFs.
They kind of take the guesswork out of stock picking.
Okay.
Instead of trying to pick individual winning stocks,
you're essentially investing in a basket of stocks
that track a specific market index like the S&P 500.
Okay.
You're not betting on one horse.
You're spreading your bets across the entire field.
Oh, okay.
That makes sense.
So instead of trying to pick winners and losers,
I'm just riding the overall market growth.
Exactly.
Okay.
So that sounds a lot less intimidating
than like day trading or something.
For sure.
What are some other benefits of index funds and ETFs?
Well, it's a built in diversification strategy.
Okay.
Which helps to reduce risk.
Plus they tend to have lower fees
compared to actively managed funds.
Okay.
So you keep more of your returns.
So with index funds and ETFs,
I can basically participate in the overall growth
of the market without needing to become
like a stock picking expert.
Precisely.
They're a great way to build a solid foundation
for your portfolio.
That's great because that was one of my biggest concerns.
I understand.
So we've talked about saving,
consistently taking advantage of tax advantage accounts
like the Roth IRA,
and investing in index funds and ETFs
to ride the market growth.
Yeah.
But amidst all this talk about returns and diversification,
I think it's easy to lose sight of like the most crucial
element that both Mayo and Ronald Reed's story highlight.
Which is?
Patience and discipline.
Absolutely.
So retiring a millionaire is not about chasing,
get rich quick schemes.
No.
Or trying to time the market.
No.
It's about staying committed to a long term plan.
Even when things get volatile.
It's a marathon, not a sprint.
Right.
And Ronald Reed, who diligently saved and invested
for decades.
Yeah.
We need to kind of trust the process and stay the course.
You got it.
And that's where a lot of people stumble.
Really?
Yeah.
They get impatient.
They chase short term gains,
or they let fear and market fluctuations
derail their long term plans.
It's easy to get caught up in the hype
when you see all those headlines
about market swings and stuff.
Oh, for sure.
It's hard to stay focused when everyone else is panicking.
Right.
But staying disciplined and sticking to your plan is key.
Absolutely.
Your emotions are not your friend
when it comes to investing.
So what else should folks keep in mind
when it comes to staying on track
for long term investing success?
One of the biggest mistakes I see
is letting their emotions drive their investment decisions.
Okay.
Fear and greed can lead to impulsive choices
that can really hurt their portfolio in the long run.
Right.
So having a solid plan helps you stay focused
on your goals and avoid making rash decisions
based on market noise.
So it's all about creating a plan and trusting the process.
Exactly.
Even when things get a little bumpy.
Yeah.
It's about having that long term vision
and understanding that slow and steady wins the race.
Exactly like Ronald Reed.
It's inspiring.
It's so inspiring.
Just this ordinary guy living a modest life
was able to achieve these extraordinary results
through discipline and a long term mindset.
It's really interesting.
But the best part, anyone can do it.
That's such a good point.
Yeah.
It's not about luck or being like a financial genius.
Right.
It's about making informed choices
and staying committed to your goals.
Absolutely.
Which brings us to a really important question.
OK.
Let's hear it.
So what does all this mean for someone like you?
You know someone who dreams of retiring a millionaire.
Right.
Because it's clearly not about winning the lottery
or inheriting a fortune.
No.
It's not about luck or hitting the jackpot.
Yeah.
So what is it about then?
It's about taking control of your financial future.
OK.
And making those seemingly small but consistent choices
that add up over time.
Like we've been talking about.
Exactly.
Harnessing the power of compounding, making smart, tax
advantage investments, and sticking to a plan,
even when the market throws you a curve ball.
Right.
It's about playing the long game.
Exactly.
And Robert Reed's story is proof that it's possible.
Right.
It's incredibly inspiring to know
that someone living such a simple life
could achieve that level of financial success.
It really is.
So where does someone even begin?
Yeah.
That's the big question.
What's a good first step?
Well, one of the most impactful things you can do
is to automate a small weekly transfer to a Roth IRA.
Even if it's just a small amount to start those consistent
contributions can make a huge difference over time
and then start exploring index funds in ETFs,
especially after learning how they can make investing
more accessible and less intimidating.
Right.
And if you're feeling overwhelmed, don't hesitate
to seek guidance from a financial advisor.
Oh, absolutely.
There's no shame in asking for help.
For sure.
A financial advisor can help you create a personalized plan
that aligns with your goals, your risk tolerance,
your timeline, all of that.
So as we wrap up this deep dive into retiring
a millionaire on a low salary, I want
to leave you with a final thought-provoking question.
OK, I like it.
What's your million-dollar dream?
Yeah.
What is it that financial freedom would
allow you to do?
Travel the world.
Start your own business.
Spend more time with loved ones.
Imagine the possibilities.
And then ask yourself, what small step
can you take today to start making that dream a reality?
Exactly.
It could be as simple as setting up
that automated transfer, reading a book about investing,
or even just committing to learning more
about personal finance.
So this deep dive is just the beginning of your journey.
The first step on the road to financial freedom.
Remember, the power to achieve financial freedom
is within your grasp.
You have the tools.
It starts with a single step.
So take that first step, stay disciplined,
and let the magic of compounding work its wonders.
Who knows?
Maybe someday we'll be sharing your story
of achieving millionaire status on a modest income.
Until next time, keep diving deep.
It's a big question, but it's an important one.
Right, so what does all this mean for someone like you?
Someone who dreams of retiring a millionaire?
Well, it's definitely not about winning the lottery.
No.
Or inheriting a fortune.
Right, it's about taking control
of your own financial future.
Exactly.
Making those small but consistent choices that
can really add up over time.
That's what we've been talking about, harnessing
the power of compounding.
Yes.
Making those smart tax advantaged investments,
and sticking to a plan even when the market gets a little crazy.
You got it.
It's about saying the course.
Ronald Reed's story is a perfect example
of how it's possible.
Yeah, it's really inspiring, right?
It really is.
I mean, it's incredible to think that someone living
such a simple life could achieve
that level of financial success.
Yeah, it really shows you that anyone can do it.
So where does someone even begin?
Well, that's the million dollar option.
What's a good first step?
One of the most impactful things you can do
is automate a small weekly transfer to a Roth IRA.
OK.
Even if it's just a small amount to start,
those consistent contributions can make a huge difference
over time.
Makes sense.
And then maybe start exploring index funds in ETFs.
Absolutely.
Yeah.
Especially after learning how they can make investing more
accessible and less intimidating.
Right.
And if you're feeling overwhelmed,
don't hesitate to seek guidance from a financial advisor.
Oh, for sure.
There's no shame in asking for help.
A financial advisor can help you create a personalized plan.
Exactly.
That aligns with your goals, your risk tolerance,
your timeline, all of that stuff.
It's definitely worth considering.
So as we wrap up this deep dive, I
want to leave you with one final thought provoking question.
OK.
Hit me with it.
What's your million dollar dream?
Yeah.
What would financial freedom allow you to do?
Travel the world.
Start your own business.
Spend more time with your family.
It's amazing to think about the possibilities.
It is.
And then ask yourself, what small step can you take today
to start making that dream a reality?
Exactly.
It could be as simple as setting up that automated transfer.
Yeah.
Or maybe reading a book about investing.
Totally.
Or even just committing to learning more
about personal finance.
This deep dive is just the beginning of your journey.
The first step on a very exciting path.
Remember, the power to achieve financial freedom
is within your grasp.
It really is.
You just have to take that first step.
And stay disciplined.
Absolutely.
Consistency is key.
So who knows?
Maybe someday we'll be sharing your story
of achieving millionaire status.
That would be awesome.
On a modest income.
It's definitely possible.
Until next time, keep diving deep.
See you next time.