7 Steps To Wealth: Invest

7 Steps To Wealth

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Welcome to the 7 Steps to Wealth. You’re on Step Six, Invest.

STEP SIX: INVEST

Leverage the best compounding tool available—the stock market—and watch your wealth grow.

Welcome to Step 6! I’m a little biased here, but I truly love this one, because you’ve done the heavy lifting: You decided. You planned. You spoke. You’re asking. You’re earning. And now, you get to watch your wealth grow as you invest.

I’ll be blunt here: You must invest your hard-earned dollars so your money grows and compounds in the background. Not you “should.” Not you “can.” You must. 

The stock market is the greatest creator of wealth in human history.

Consider this: If you had invested $1 in the U.S. total stock market in 1927, that $1 would have aged through the Great Depression, the German occupation of Europe and a deadly Cold War, the fear of communism and McCarthyism, the assassinations of President Kennedy and Martin Luther King, Jr., war and violence in the Middle East, Black Monday in 1987 (which touched off more than a 30% market sell-off), the real estate boom and bust, the financial crisis, the COVID pandemic, a recession two years later…

I could go on, because the headlines don’t stop. The world doesn’t stop. The stock market, though? The stock market keeps working.

Proof: That $1 you had invested in 1927 would have grown to $10,654 as of December 31, 2023. 

Let’s say you’d invested $100,000 in 1927. You’d be sitting on a financial legacy of $1.0654 billion right now without lifting a finger

(That math is correct, I promise.)

Of course, that initial investment would have been compounding for nearly 100 years now… and I don’t have 100 more years to live. 

Maybe you don’t think you do either, but either of us would take even half of that, right?

So you might not have 100 years, but you do have an investing lifetime, no matter your current age. Let’s figure that out. 

We’re living longer and longer these days, so let’s say you plan to live to 100. Take your current age, and subtract that from 100. That’s your investing lifetime. Now, you might be thinking, “I don’t want to work until I’m 100, though!”

People often make the mental mistake of thinking they’re done investing at retirement.

Your money has to outlive you, so you need to take the long view. Just because you’re done earning doesn’t mean you’re done investing. You’ve probably got 40, 50, or more years to invest. 

And when you’re ready, the stock market is ready for you.

Now, be honest. What’s the first thing that comes to your mind when I mention the stock market? I hear things like:

  • “I don’t understand it.”
  • “It’s risky.”
  • “It’s scary.” 
  • “Oh, isn’t that a Ponzi scheme?”
  • “It’s unpredictable.”
  • “It’s not safe.” 

These statements represent a very reasonable interpretation of the stock market, given we’re largely educated about the market by the national financial news media. 

I’ll say it again: In actuality, the stock market is the greatest creator of wealth in human history. 

The problem is that you’ve likely been educated–through no fault of your own!–by CNN, MSN, and Yahoo! Finance. Everywhere you look or listen, all they talk about is what’s wrong with the stock market. They’re always in your ear screaming that something is going very wrong. 

Let’s remember that the media’s business is actually advertising. They literally thrive (financially) on grabbing you by the lizard brain and scaring you.

That’s your amygdala, and news anchors know how to trigger it. When you watch a stock portfolio fall on the news? Your brain experiences the same fear as if you were being chased by a tiger. I promise you, one is actually more dangerous than the other.

For anyone who watches the news, our take on the world is probably that things aren’t going so well. And the general belief is that the stock market parallels world events.

But remember that $1 investment that traveled through some of the worst events throughout a century and still came out $10,654 stronger?

That’s the strength of the stock market.

In truth, stock market performance is usually almost completely unrelated to what’s happening in the news. 

And, here’s the more important thing to focus on: You don’t need to concern yourself with what the stock market does. You only need to care about what your money does in the stock market. 

The stock market is actually very reliable, if you know what to expect from it. All the evidence shows that buying and holding a professionally constructed, well-diversified, low-cost, index-based portfolio is going to provide those returns we just talked about.

At Hendershott Wealth Management, my fee-only financial planning firm, we’re using those professionally constructed investment portfolios with our wealth management clients and, honestly, my own financial future. It’s the highest performing methodology we know about. 

And it works. 

In fact, when you’re living out your financial freedom after you’ve mastered the 7 Steps to Wealth, I hope to be using this methodology in your portfolio as your wealth manager. 

After that, all that’s left to do is protect that financial freedom… and that’s what our final step is all about.

Investing can be fun… especially if you don’t try to go it alone. 🎉

At Hendershott Wealth Management, we’re a team of female, fee-only fiduciaries who work with our clients to make sure their investments are in line with their life goals.

Whether your investing lifetime is 10, 20, or 50 years, we’d love to chat about how you can make the most of it Get started today with a 20-minute chat with our team.

All three steps in our initial series of meetings are complimentary. We invest in you to maximize the chances of building a valuable partnership—so you can invest confidently in the stock market, and your future. If at any point either of us feel we might not be the right fit? No biggie: You’ll walk away with nothing lost and plenty of clarity gained.

You deserve an advisor you can trust with your financial future. 💪

All investing involves risk, including the potential loss of principal. There is no guarantee that any investment plan or strategy will be successful. Advisory services provided by Hendershott Wealth Management, LLC (“HWM”), an investment advisor registered with the U.S. Securities and Exchange Commision. Registration does not imply a certain level of skill or training.

All written content in this article is for information purposes only. Opinions expressed herein are solely those of HWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.
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