Author Topic: Why the Tortoise Retires A Millionaire  (Read 621 times)

hubag bohol

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Why the Tortoise Retires A Millionaire
« on: December 16, 2012, 02:53:29 PM »
by ALEX on DECEMBER 19, 2011
http://personalfinancebythebook.com/



You’ve heard the story about the Tortoise and the Hare, right? For those that weren’t exposed to the childhood favorite, it goes like this:

Tortoise is sick of Hare teasing him for being so slow. One day he challenges Hare to a race. As the race begins, Hare easily rushes ahead. When Hare is half way, he looks back and sees Tortoise far behind. To make tortoise look even worse, Hare decides to take a nap right on the track! But when Hare wakes up, he sees Tortoise inches from the finish line! He runs as fast as he can but is beaten by the tortoise who gleefully says,

“Slowly does it every time!”

The moral is simple: do the work and you’ll win the race. Hare thinks he can get by without effort and he loses. The tortoise slowly plods along, even when he’s far behind, and eventually wins the race.

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hubag bohol

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hubag bohol

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Re: Why the Tortoise Retires A Millionaire
« Reply #2 on: December 16, 2012, 02:54:52 PM »
If Tortoise was an investor (and I’m sure he is) he would become a millionaire the same way he won the race: slowly every time.

Invest Like the Tortoise

Imagine the Tortoise as a “normal” investor. He puts about 15% of his income into mutual funds with a pretty boring breakdown:

25% in Growth
25% in Growth and Income
25% in Aggressive Growth
25% in International

It’s average, boring and gets a normal 12-to-18% return. Some months are up, some months are down, but the tortoise plugs along for 30 years. If his investments were in a Roth IRA and he contributed $414 a year at a 12% interest rate he would have 1.46 million in 30 years. Even more exciting, our tortoise only contributed $149,000 dollars!

He’s a millionaire by year 27 and if he increases his contributions at any time he’s a millionaire significantly sooner.

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hubag bohol

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Re: Why the Tortoise Retires A Millionaire
« Reply #3 on: December 16, 2012, 02:55:20 PM »
What About the Hare?

The Hare doesn’t want to wait 30 years to grow that nest into a million bucks. Watching 4,000 become 5,000 that first year isn’t exciting. He’s investing in junk bonds, gold, and learning to time the market. He thinks he can get 10 or 20 times his investment by taking the risks. It’s more fun than the tortoise’s method and he will be a millionaire in a few years!

Sadly for him, history shows us that Hare investors get about the same returns as gamblers. They may see significant early gains, but in the end the house wins and they lose everything.

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hubag bohol

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Re: Why the Tortoise Retires A Millionaire
« Reply #4 on: December 16, 2012, 02:56:01 PM »
Be the Tortoise

It’s easy to get swept up in big numbers and “secret methods”. The Ponzi scheme works because the Hare’s method is more exciting than the tortoise’s.

But if you want to retire a millionaire, then you need to remember: “Slowly does it every time!”

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hubag bohol

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