There is No Secret Sauce

There is no secret sauce blog header

 

 

I’m going to let you in on a not so well-kept secret from the financial services industry. There is no secret sauce. There is no specific investment, decisions, technique, or strategy that is going to make you rich. There is no one thing you can do that is going to make you successful.

a picture of a special sauce

 

In fact, I’d be that if you gave up and stopped trying to find an easy one thing you can do to be successful, you would have a much higher chance of getting there.

 

You see, when it comes to money, building wealth is not a matter of making 1 or 2 correct decisions. Building real wealth is a series of small decisions that over time add up to generate enormous value.

 

blocks saying step by step

 

What do I mean by this?

 

Deciding to take more risk on your investments isn’t going to make you rich. Saving more every month won’t either. Using low cost ETF’s won’t do it. Delaying retirement isn’t going to cut it. How about increasing your savings over time? Nope. What about remortgaging the house and investing it?

 

If you just focus on using any of those single techniques, and don’t take on all of them, it isn’t going to cut it.

 

You see, being financially successful does not boil down to one strategy, one technique, or some form of a secret sauce. Being financially successful constitutes a series of small steps that over time leads to real wealth.

 

Let’s take a look at two 30 year olds, Adam and Eve. Adam is going to start saving at 40, using low cost ETF’s only because he has heard that is all the rage! He will save $1,000 per month until age 60. Eve is going to start saving $500 a month at age 30, invest in higher fee portfolio, increase her savings over time (5% per year) and delay retirement saving until she is 65. I’ll assume a gross return of 8% for both of them. A .5% fee for Adam and a 1% fee for Eve. Resulting in a net return of 7.5% for Adam and a net return of 7% for Eve.

 

A chart showing adam and eves investment values over time

 

Obviously, we all want to earn more on our investments and maximize that as much as we can. However it is only a single piece of the puzzle. The more tools and options you take advantage of, the better off you will be. Would you rather end up like Adam, or have nearly triple the nest egg like Eve?