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The Automatic Millionaire summary
David Bach
A Powerful One-Step Plan to Live and Finish Rich
4.2 (148 ratings)
13 mins
7 key ideas
Audio & text
What is The Automatic Millionaire about?
Automatic Millionaire (2003) is a highly practical and useful guide that shows how anyone can, over time, turn a modest income into a fortune. Author David Bach proves that earning a million dollars doesn’t require any complicated financial wizardry, or even a disciplined spending budget – all it takes is a simple one-step plan!
About the Author
David Bach is a world-renowned financial expert who’s helped countless people improve their financial situation. He’s also a prolific author of many books that have appeared on the best-seller lists of the New York Times, Wall Street Journal, BusinessWeek and USA Today. These books include Smart Women Finish Rich and Start Late, Finish Rich.
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The Automatic Millionaire
summarized in 7 key ideas
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Key idea 1 of 7
You don’t need to earn a lot to become an automatic millionaire; you just need to save small amounts on a regular basis.
You may not think that earning under $40,000 per year will lead to your becoming a millionaire – but if you use this money wisely, you’d be surprised how far it can go.
Take Jim and Sue McIntyre. When they were getting financial advice from the author, he was astounded to notice that Jim had never earned more than $40,000 a year, yet here they were in their early fifties with nearly $2 million in net worth.
The McIntyres are living proof that the key to success isn’t earning a huge paycheck. It’s being smart and creating yourself an easy-to-manage financial plan.
Soon after their marriage, the McIntyres were lucky enough to receive invaluable financial advice from their parents. Jim and Sue were told that they could either work for their money or make their money work for them.
Obviously, the McIntyres wanted to put their money to work, so they came up with a simple-to-follow plan: employing a portion of every dollar they earned. It started with a mere 4 percent of their income, and, over the next few years, they gradually increased that to 15 percent. To avoid the risk of frequent budgeting arguments, they also set up a system that automatically distributed and budgeted their funds.
What the McIntyres also had going for them was that they established and started this plan early on. This allowed the money they put aside to increase in value exponentially, thanks to its accruing compound interest.
So, with this in mind, there’s a very good chance that you already earn enough to become a millionaire in the years ahead.
Over the past five decades, the average prices on the stock market have risen by around 10 percent every year. This means that if you set aside $2,000 every year during your twenties, when your sixty-fifth birthday rolls around, you’ll have over a million dollars to celebrate with!
This idea of getting rich over time by regularly putting away a small amount is called The Latte Factor. Your average coffee shop latte costs around $3.50, which, as an everyday cost, adds up to around $1,250 per year. If you’re a pack-a-day smoker, spending $7 on cigarettes every day will add up to around $2,500 per year.
Now, let’s say you put aside $10 every day. If we add an annual return of 10 percent, that would leave you with almost $700,000 in 30 years’ time, and nearly $2 million in 40.
So, today is the day to start reconsidering the money you spend on all the “little things,” since there’s a good chance you already have what it takes to become an automatic millionaire!
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Who should read The Automatic Millionaire
- Professionals who want a better retirement
- Young couples planning their finances
- Anyone looking for solid financial advice
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