The Ten Percent Solution

 

wasn't working and I was far from wealthy. But Mr. White went on to explain a few things that I'll tell you now . . . things that turn a seemingly simple sentence into an extremely powerful thought.

"Cathy, if you invested twenty-four hundred dollars a year, say two hundred dollars a month, for the next thirty years, and averaged a fifteen percent return a year, how much money do you think you'd end up with?" Roy challenged.

"Well, twenty-four hundred times thirty is . . . seventy-two thousand—"

"I'm impressed," I interrupted.

"Plus growth ... I don't know ... I'd say two hundred thousand. Maybe not quite that much," Cathy concluded.

"Wrong. The answer is one point four million dollars," Roy declared.

"Get real!" was Tom's initial reaction. When he realized that Roy was serious, he paled. "What about inflation? And where am I going to get fifteen percent? For that matter, where am I going to get two hundred dollars a month?" he stammered.

"All good questions, Tom, and we'll get to them in due course. Dave, you try one. If you had started putting thirty dollars a month away, the equivalent of a dollar a day, at age eighteen and you continued until age sixty-five, averaging a fifteen percent annual return, how much would you end up with?"

"I hate math, Roy, but I'll give it a shot. Thirty dollars a month is three hundred and sixty dollars a year, times forty-seven years . . . Anybody have a calculator?"

"It's just under seventeen thousand," Roy interjected.

"Plus growth. I'll say around seventy thousand."