We already talked about the case of Ferrán and his coffee. And today I bring you the case of Irene and Sofía. Typical party conversation…
- Well I would love to invest, but I don’t know how to do itsays Irene worried.
- Don’t worry – Sofía responds smiling -, I want to too and I don’t know how.
Irene, Sofia, know that you can be millionaires. And, both Irene and Sofía are very young. And in addition to being young, they are very smart. Good jobs, ability to save and, as they already knew, they already have something saved, about 8 thousand euros each. Furthermore, they are willing to make a small sacrifice additional to achieve a periodic savings of 500 euros per month, now that they still live at their parents’ house. Of course, in 3 or 4 years, they want to become independent and will only be able to contribute 50 euros per month.
The situation is very good: not everyone has this capacity, nor are we so smart, nor so young, nor do we have so much money saved. But they do. So they decide to start their adventure.
Since they do not know how to invest, they are suggested to do so through an account that they open in a quality broker advised by a friend who works in the industry and who is independent. Furthermore, this character advises them to index themselves in a MSCI World or a large index, such as the S&P 500. The average profitability of the last 90 years has been 11.24%
Well let’s get to work, They invest the initial amount and automate during those first years your monthly savings. They don’t look at the account. Never. Not even when it rises or falls a lot. They have explained to them that yes invest a little more when markets fallthey would obtain additional profitability, but they do not have the time, knowledge, or desire. They prefer never to look at it. One is dedicated to the world of law and the other to human resources. They are very good at what they do, but finances take them far away.
Finally they become independent and modify their large periodic savings for one more accessible to everyone: 50 euros monthly. And they still don’t look at it. In fact, they live as if they don’t have that account.
After each having formed a wonderful family and a successful work life, they both decide to look at their account. They want to retire, but They don’t know if the pension is going to reach them. to stop working under the conditions they want. And, oh surprise, when you look at the account, you see that They have 2.5 million euros!
Source: Carlos Arenas Laorga
Both Sofía and Irene can’t believe it. One day, while they were both having coffee, one said to the other.
- Did you know we could have retired years ago? Comments the entrepreneur Sofía.
- It’s impossible, Irene answers, I have calculated the contributions we have made and they do not reach 60 thousand euros. I have worked in human resources for many years and I have not seen anything like it. It’s incredible, she comments in admiration.
Finally, Sofía and Irene, Irene and Sofía, friends since that distant party, decide traveling the world, enjoying his small fortune and the health they enjoy.
We are all Irene and Sofia. Each one with its particularities. There are those who cannot make such a large initial periodic savings and there will be those who have greater funds; There will be those not so young and there will be even more; There will be those who can contribute a higher initial amount and those who cannot as much; There will be, in short, all colors. But what is important is not the minutiae of the details, but the general idea. And this is the usual one: invest as soon as possible. let it time and compound interest work their magic.
Epilogue.
Both Irene and Sofía, advised by their friend, opened an account when they were their respective children being born. They gave each one 15 euros a month. Their children were already counting, without doing anything, on 1 million euros at 60 years old for this small initiative of their mothers. And, advised by them, they also decided to make regular savings from a very young age. I’m not telling you how much money the children earned so as not to make you envious. I’m just telling you that they bought a house with almost no mortgage in a nice neighborhood in Madrid and that they enjoyed a more than good standard of living.
It all started at a distant party in their mothers’ youth. It all started with a small act. An act that changed the future of their families forever.
Be smart, be like Irene and Sofia.