Marc: "An easy chance to double your money on America's debt bubble..."
According to Marc Lichtenfeld, you don't have to worry about America's debt bubble. In fact, his research shows that it will soon end with an historic opportunity worth $93 trillion. This coming "black swan" event will last just three minutes. Yet it will transform the playing field for generations of income investors. Investors who prepare now could pocket up to 164% - quickly - along with double-digit dividends, for life.
That's why Marc has created this special presentation with all the details, including recommendations. Simply click here now for instant access. | |
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| Wednesday, November 5, 2014 | Issue #2411 | |
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Let's Make That Kid a Millionaire Marc Lichtenfeld, Chief Income Strategist, The Oxford Club
 If you know someone who had a baby on October 20, you're about to become their best friend - because you just made that kid a millionaire.
Even if you don't know anyone born on that date, you can probably make a kid a millionaire with a very small amount of money.
Here's the story...
Voya Financial (NYSE: VOYA), which was previously a subsidiary of ING Group, is running a special promotion. The parents of any child who was born on October 20, 2014, will be given $500 in the Voya Global Target Payment Fund (Nasdaq: IGPWX). However, the parents can take the money out at any time they wish.
The idea behind the promotion, besides making people aware of Voya's new corporate identity, is to start the newborn saving for retirement. It may seem strange to be thinking about Junior's retirement when he isn't even potty trained yet. But the longer you let money compound, the more you make.
So if you know anyone who had a baby on October 20, point them toward the Voya Born to Save program. They must enroll and register by December 19.
(Note: The Oxford Club has no financial relationship with Voya Financial. I just thought this was a cool program, and it helps make my point about how important compounding is to your investing results.)
Regardless of whether there is a newborn in your life, the Voya promotion offers a terrific lesson in letting your money grow and compound for years.
The Tiny Company Solving High-Tech's "Doomsday Scenario"
Your smartphone's been getting smaller... your computer faster... and your flat-screen TV cheaper. Problem is, all these gadgets are running out of space for more memory and computing power. It's an "end of the road" scenario where electronics STOP getting smaller, faster and cheaper. But now one small company has the answer. A patented material that will keep the $357 billion consumer technology market marching forward. As it does, we expect the company's shares to rocket from their $9 position to monumental levels. Details here. | |
Consider if the child's $500 is allowed to grow for 18 years at the historical market average return. When the kid goes to college, the account will be worth $1,945. You nearly quadruple your money. Not bad.
Allow it to grow for 65 years, until retirement, and the total is $67,555. A return of 13,411%. Quite a difference.
But 67 grand doesn't really allow you to retire, does it? Let's look at ways to get that new bundle of joy to years of golf, theater, travel and restaurants in his or her golden years.
The first thing you can do is dump the Voya fund and put the money in Perpetual Dividend Raisers - stocks that raise the dividend every year. I recommend ones that meet the requirements of my 10-11-12 System - the kind I write about in The Oxford Income Letter. Using this system, investors can expect a 12% average annual total return rate. Those stocks, generally speaking, raise their dividends by at least 8% per year - often more.
If that $500 earns 12% per year for 65 years, the difference is staggering. Instead of $67,555, the account is worth $790,936. That's a one-time investment of $500 and letting it earn an average of 12% for 65 years.
Need more cash than 800 grand? Add just $100 per year to the account, and it becomes worth $2,266,417 in 65 years. Invest $500 a year and it's worth $8,168,341.
65 Years Is a Long Time
Those numbers are great, but not everyone is thinking about a newborn's retirement. Most of us are focused on our own retirements - either preparing for it or getting the most out of it.
But when it comes to planning a financial future, no time is too soon. The most important thing you can do is let the money grow for as long as possible. Each additional year can make a meaningful difference.
According to the U.S Census Bureau, the average retirement savings for a 50-year-old is $43,797, with the average retirement age at 62.
If that average person lets his money compound at 12% for 12 years, while adding $2,000 per year, he will have $224,690 at age 62.
If he can wait just three more years before touching the money, he'll have another $98,542. Just 36 months increased the account by 44%.
And if the investor can hold off until age 70, he'll wind up with $583,876.
That's the power of compounding.
Pros and Cons of Compounding Dividends
Like every investing strategy, there are some things you should be aware of. There are advantages and disadvantages to consider.
Pros:
- It's easy. Once you have your investments, you basically just let the numbers work their magic over the years. There's not much you have to do, other than make sure the company is still solvent and paying its dividends.
- It's cheap. When you buy Perpetual Dividend Raisers, you pay a one-time commission to your broker (which can be under $10 per trade if you use an online discount broker). That compares to paying 1% of your assets in expenses to a mutual fund company or 1% in fees to an advisor. With a portfolio of 20 stocks, your entire cost should be less than $200, no matter how long you hold the portfolio.
- You won't overtrade. Buying and holding for years means you won't sell your investments at the wrong time like the overwhelming majority of investors do.
- It works. Albert Einstein famously called compounding the most powerful force in nature.
Cons:
- It's boring. The strategy here is to buy and hold. And hold. And hold even longer. So if you love to trade, you'll want to do your trading with separate funds.
- It's slow. Compounding takes a while to work its magic. You may even be underwhelmed in those first few years. Using the 10-11-12 System, you might not make 12% per year for several years. But over the long haul, you absolutely should.
- It requires intestinal fortitude. When the market is selling off, even crashing, it is imperative that you do nothing. In fact, those lower prices will help you in the long run because you'll be reinvesting your dividends at lower prices, which gives you more shares, which generates more dividends, which gives you more shares...
If you want to do just one thing to improve your investing results, let your money compound for as long as possible. Getting those extra percentage points for even just a few more years will put many more dollars in your account.
Good investing,
Marc
Editor's Note: Marc has been pounding the table about a little-noticed upcoming event deep within our monetary system. He says it will change financial history, yet most investors have completely overlooked it. To discover how you can keep your wealth protected and even grow it at more than six times what the average investor will once this event hits, click here. | |
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Three years after starting my Wall Street career, the white-haired market veterans began calling me "Little Jacob Little." When I heard this, I was only 21 years old. So I cautiously maintained my respectful smile, chuckled and went about my business. But, secretly, I wondered if I was being praised or dissed. Read On... | |
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It took guts for Marc to recommend one unloved stock. But his readers are sure glad he did. It's more than tripled the market and is yielding 6.7%. Readers of Investment U's premium edition are learning about it today. Find out how to join them by clicking here. | | |
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