Financial Freedom

By Alexander Green

Originally posted November 4, 2019 on Liberty Through Wealth

In my last column, I discussed National Geographic Fellow Dan Buettners exciting new research on the Blue Zones, home to the worlds happiest and longest-living people.

And while money doesnt always lead to a longer and more satisfying life, it certainly doesnt hurt.

For example, in a Gallup-Sharecare study, nearly 90% of people who were managing their finances well said their relationship with their spouse or partner was strong.

Yet when finances were cited as a sore point in the household, the number of happy relationships plunged to just 60%.

Moreover, it didnt matter whether the couples were affluent or not. Money troubles create relationship troubles.

Ive seen plenty of couples, for instance, where one was an avid shopper and the other a dedicated saver. Thats a bad combo.

I knew another where one wanted to tap into retirement savings to get a new boat or remodel the kitchen and the other felt strongly otherwise.

Things went decidedly south from there.

Financial compatibility or at least peacemaking compromise seems to be a prerequisite for connubial bliss.

Arguing and worrying about money is toxic. It creates stress and conflict.

Yet when a households finances are managed smartly, relationships improve.

Studies show there is even an inverse relationship between wealth and obesity. Financial well-being, it turns out, even helps keep you slim.

(An important consideration since obesity is highly correlated with hypertension, heart disease, diabetes, stroke, dementia and some forms of cancer.)

Yet in the 2019 Retirement Confidence Survey, the longest-running survey of its kind, only 23% of workers said they were very confident theyd have enough for a comfortable retirement.

(In fact, only 35% of current retirees are very confident they have enough.)

This isnt terribly surprising when you consider that 32% of Americans have no savings and 58% have less than $1,000 set aside.

This is a national tragedy, one that will have serious ramifications down the road when nonsavers petition their elected representatives to redistribute the incomes of those who have saved and invested.

Dont get me wrong. Some people are poor due to bad genes, bad luck or circumstances beyond their control.

But can this possibly describe the nearly two-thirds of Americans who havent saved for a rainy day much less up to three decades of retirement?

Especially when financial independence requires only three things:

Heres an example

Up until youre 25, your need for a home, transportation, healthcare and other expenses may take every penny you earn.

But starting at age 25, lets say you invest $190 a month in an S&P 500 index fund and earn nothing more or less than the markets long-term average annual return of 10%.

With dividends reinvested, that would turn into $1.02 million by age 65.

Thats right. Just $190 a month is all it takes to go from flat broke to millionaire status.

According to the U.S. Census Bureau, the median household income in this country in 2018 was $61,937.

So $190 requires the average household to save just 3.6% of its income or less than 5% post-tax to hit the seven-figure mark in 40 years.

Even if a household could save only $95 a month, it would still turn into a half-million dollars in 40 years.

(And if they bought a home and didnt pull out and spend the equity along the way that would likely get them the rest of the way to millionaire status.)

Saving. Investing. Compounding. Building equity.

Its so simple. Yet many Americans never get out of the starting blocks.

Why?

A major reason is too many people decide theyll start saving after all their wants and needs are met.

That doesnt work.

We live in a wonderful free market system where companies knock themselves out to bring us a constant array of exciting new products and services.

If you plan to start saving after all your familys desires are met well, good luck with that.

Heres the bottom line: Financial freedom doesnt just provide you with security and peace of mind.

As Dans research reveals, your health and happiness may depend on it as well.

Incidentally, Dan and I as well as several other nationally renowned business and investment experts will be speaking at The Oxford Clubs 22nd Annual Investment U Conference at the beautiful Park Hyatt Aviara in Carlsbad, California, April 16-18, 2020.

This promises to be one of our very best conferences ever. For more information, click here.

Good investing,

Alex

An expert on momentum investing, value investing and investing based on insider activity, Alex worked as an investment advisor, research analyst and portfolio manager on Wall Street for 16 years. He now runs the wildly successful Oxford Communiqu, ranked as one of the top investment newsletters by Hulbert Digest for more than a decade. He is also the author of four national best-sellers: The Gone Fishin Portfolio, The Secret of Shelter Island, Beyond Wealth and An Embarrassment of Riches. He shares his wisdom in his free daily e-letter, Liberty Through Wealth.

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Rich Life: The Blue Zone of Financial Well-Being - Investment U