The document discusses the power of compound interest and long-term investing for building wealth. It provides examples showing that starting to invest early and doing so regularly, even with small amounts, can result in having over $1 million by retirement age. Small daily sacrifices, such as skipping a coffee shop latte, can fund an investment that grows substantially over decades through compound interest.

1. INVESTING FOR THE LONG TERM

2. Most people earning $25,000 a year believe that their only shot at becoming a millionaire is to win the lottery. The truth is that you are more likely to be struck by lightning several times than win the lottery However, with Compounding Interest, anyone can slowly transform small change into large fortunes over time.

3. Take 100 Americans starting out at age 25. By age 65, one will be rich and four will be financially independent. The remaining 95 will reach the traditional retirement age unable to self-sustain the lifestyle to which they have become used to living. Source: Bogelheads’ Guide to Investing: 2005

4. The Impact of Inflation 1 Source: Energy Information Administration. 2 Source: The College Board, Trends in College Pricing . 3 Source: Motion Picture Association of America. Gallon of Unleaded Regular Gas 1 Private Four-Year College tuition 2 Movie Ticket $0.61 $1.16 $1.36 $1.89 $2.95 1976 1990 2002 2004 2006 $2,117 $9,340 $17,123 $19,710 $31,916 1974-75 1990-91 2001-02 2003-04 2005-06 $2.00 $2.75 $3.55 $5.00 $6.00 $7.00 $8.50 1975 1980 1985 1990 1995 2000 2006

5. The Magic is in The Compunding

6. If a child is born today and wants to be a millionaire by age 65, how much will the child have to invest every day to get to $1,000,000? (Assuming an annual 10% return) .54 cents a day

7. Eric Early At age 25, Mr. Early invests $4,000 a year for ten years, for a total investment of $40,000. ($4000 a year is $11 a day.) Assuming an 8% annual return, Mr. Early’s investment will be $629, 741 at age 65 By starting 10 years earlier and making 1/3 the of the investment, Eric ends up with 29% more $ Larry Late At age 35, Mr. Late invests $4,000 a year for 30 years, for a total investment of $120,000 Assuming an 8% annual return, Mr. Late’s investment will be worth $489,383

8. "Start Early and Invest Regularly"

9. What’s Worth More to You? A Bottle of Soda Every Day or $921,971? Save and Invest Just $1.50 Per Day ($45.63 per month) Assumes Monthly Compounding at 0.86356% or 10.36% per year Age When You Start Investing Amount Saved Per Month # of Years Spent Investing # of Months Total Amount Invested Value of Investment at Age 67 17 $45.63 50 600 $27,375 $921,971 22 $45.63 45 540 $24,638 $548,228 27 $45.63 40 480 $21,900 $325,121 32 $45.63 35 420 $19,163 $191,935 37 $45.63 30 360 $16,425 $112,429 42 $45.63 25 300 $13,688 $64,967 47 $45.63 20 240 $10,950 $36,635 52 $45.63 15 180 $8,213 $19,722 57 $45.63 10 120 $5,475 $9,625 62 $45.63 5 60 $2,738 $3,598

10. THE LATTE FACTOR Cut out that Foo-Foo drink at Caribou or Starbucks every day, make your own coffee at home, and save up to $1800 a year. Then invest the difference and become a millionaire

11. Here’s Oprah’s Latte Factor http://www.oprah.com/tows/pastshows/200401/tows_past_20040113_e.jhtml

12. THE END