top of page
  • Writer's pictureMichael Hernacki

The Only SURE Way to Get Rich



Hundreds of books have been written about how to get rich. I even wrote one myself. New investment systems are appearing all the time. Some even claim their system is guaranteed to work. But only ONE method meets that test. Only one system works every time. And here it is.

 

The Eighth Wonder of the World

Albert Einstein, who was a scientist and mathematician, not an investment advisor, was credited with this stunning pronouncement: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

 

Skeptics say Einstein never made that statement. Even if he didn’t, it’s still true. Some years ago, a personal experience convinced me that whoever said it was probably right.

 

Earn, Save, Wait

This lesson came to me when my Uncle Johnny died in 2007 at the age of 88. A World War II refugee from Poland, John Nowak came to the U.S. in the late 1940's with only the shirt on his back, no education, and no knowledge of English. He worked on a farm, in a factory, and in a machine shop during his life. He never made more than $9.00 an hour. He never bought a share of stock or a bond. He never owned investment real estate. In fact, he never made a single investment in his life, other than the home he lived in.

 

Yet when he died, he left an estate of slightly over a half a million dollars.

 

Is that "rich"? Some may argue that a half a million dollars didn’t really make you rich in 2007. Maybe not. But Uncle Johnny had two pensions plus Social Security, so he didn’t work the last 25 years of his life. He paid cash for his house and did not have a penny in debt. He lived in an upscale neighborhood, drove high-end GM cars, and traveled wherever and whenever he wanted. That seems pretty "rich" to me.

 

How did he do it? In the only SURE way possible. He worked for his money, saved a portion of every paycheck, and let it grow. And grow. And grow. Over years and years.

 

Uncle Johnny put all his savings into banks, government bonds and annuities with guaranteed values. Every other financial vehicle involves risk, and when you take a risk, you can lose. Uncle Johnny never risked a penny, and he never lost one. Instead, he used the eighth wonder of the world — compound interest — to make himself rich.

 

It’s Not Sexy, But It’s Sure

Using the no-risk, compound-interest system has three drawbacks:

1. It’s slow. If he had taken some risk, he could have made money faster.

2. The returns are not great. With riskier investments, he could have amassed a lot more than half a million in his lifetime.

3. Earning, saving, and waiting are not much fun. It's a lot more exciting to watch your stocks jumping up and down, or your real estate leveraging its value into the stratosphere.

 

But Uncle Johnny wasn't in the game to make money fast or have fun. He was in it to assure the future for himself and his wife. That he did, and he did it well.

 

I'm not advocating that you adopt a no-risk financial strategy, or that you avoid all but guaranteed investments. What I’m advocating is that you SAVE a portion of every dollar you earn, and once that money goes into savings or conservative investments, you don't take it out again for a very long time.

 

Let it grow. Let it compound. Put the eighth wonder of the world to work for you — and see what happens.


 



Comments


Commenting has been turned off.
bottom of page