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  • 3 years ago
DR 198: The 3 Ingredients to Building Lasting Wealth

DR 198: The 3 Ingredients to Building Lasting Wealth

Building wealth isn't rocket science. Sure it can be hard to spend less than you make. And investing can be a bit overwhelming at first. But the math behind wealth is really simple.
It only has three ingredients. And that's true whether you're Warren Buffett or a school teacher. It doesn't matter how much you make. The three things needed to build real wealth don't change.
Here they are--Savings, Return, and Time. That's it.
Savings: How much you save each month or year;
Return: Your after-fee rate of return; and
Time: How long you invest
What's interesting about these three factors is that most people obsess about the first one. We focus on how much we save, or don't save, but give little attention to return or time. We worry over whether we can add an extra $50 a month to our 401k or IRA, but give little thought to the expense ratio of our mutual funds or paying an expensive investment advisor one percent or more.
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We also don't obsess about the time, partic