How to Be Very Wealthy By 67

Current Net Worth: USD 1,038,557

As a resident of Europe, I have to admit that consumer financial system here is designed to make it a workers paradise.  When it comes to increasing your wealth, it seems to be entirely focused on getting very small, but guaranteed returns to supplement a very generous state pension

I currently am trying to help a friend of mine, who recently received a cheque for USD 10,000, invest in stocks. Wow, I never thought it would be so difficult. Online brokers are apparently non-existent in this country. The only way to easily “invest” is to hand your money over to an insurance company to give you small (1-3%) return. What kind of a deal is that? If we are looking at 20 to 50 year investment horizons, it is a HUGE mistake to take the guaranteed returns.

Here is an example:

Let’s assume that someone wants to invest USD 10,000 every year starting at age 24. The amount of the savings is increased by 2% every year as the 24-year old gets salary increases.

Option 1: You invest with the insurance company at 2% per year until you retire at 67.

Total Value of Savings:  USD 1,394,995

Option 2: You invest in small cap value companies at 15% per year until you retire at 67.

Total Value of Savings:  USD 50,861,645

The “entrepreneurial” option pays off about 36 times more than the “nanny” option. 

There is absolutely no doubt I will let my friend hand his money over to an insurance company. I will post an update when he finds a way to productively invest his money.