I really wish Unions took issue with our investment opportunities, as well as I wish we were all more financially educated.
Many people think that it is just not a big deal; it’s not that we are going to become millionaires anyway! Some may say. Sadly, that is the same attitude that has gotten us in this hole to begin with. Our own ignorance has stripped our opportunities away. And yes, many of us has indeed the opportunity of becoming millionaires if we stopped living like the poor, who fantasizes a life of riches, with expensive cars, eating out at fancy restaurants, wearing designer’s clothes and bags, taking luxurious vacations, etc. And somehow we wonder how we never have enough to cover all we need. Well, how much do we need? How much do we want? How much is enough? Does “enough” even exist? Or does enough is simply a euphemism to always want more and more?
A simple exercise may be “enough” to put all this in perspective. Think about how many brand new cars we buy in our lives? Think about how we put ourselves in a self-inflicted situation where we are helpless before those car payments. Imagine, if instead of forcing yourself into car payments you decided to just invest that same amount of money into your future.
According to a CNBC report the average car price has climbed up to about 36K; including interest, Bluetooth technology, GPS navigation to show you where the grocery store is, and cameras even inside of your trunk to monitor your cargo.
If instead of grinding your life away to make car payments you invest that price tag into, YES!- your 403B plan, you will have a very hefty amount of money over time and much better tax liability than what you have now. Not to mention that with the help of interest compound it will not take you a lifetime to get amass some serious wealth.
Anybody who manages to save 100K in a 403B plan, IRA account or Roth IRA account will easily become a millionaire thirty years down the road without adding a dime after reaching 100K.
I know what you are thinking. “Well, but you need the 100K first.” Fair!
But hang on a second! If you are able to commit to a 36K car payment over teh span of 6 years, that should tell you that you are at least capable of saving 6k a year. Great! That is the limit for an IRA account.
Imagine what could happen if you continue adding to your stash of savings!
But beware! You are not the only one who knows this. Predatory companies are fully aware of your possibilities and they want a cut. By charging you 1-2% more than reputable companies they can end up with 40% of your savings. Yep! It is not a typo. FORTY PER CENT!!!
Check this article by Vanguard where they explain the huge impact of a 2% fee. Imagine the impact of companies like AXA , which charges a total of 5-7%.
That is why we, teachers, need to get on board with this fight. This is not money we are getting for free. This is money from our paychecks, and we should have the right to demand better. If private companies can offer better options to their employees, so should school districts.