The squeaky wheel may get the grease but the flywheel gets the dough.
What is a flywheel, you ask? Rob describes it as a wheel that doesn’t like change. It’s difficult to get it rolling, but once it builds momentum, you can’t stop it.
That’s what you want to envision as you contribute to your investments. If you haven’t begun your investment journey, you should know that it’s normal to see your cash grow at a turtle pace. In the first month you may see you’ve earned only a few cents when you expected to earn several dollars. Patience and consistency are key.
Your flywheel will move faster with time. But, how much time? Rob tells us at least 9 years. If you think 9 years is a long time, do you remember Captain Sully making a smooth landing in the Hudson River? That happened 9 years ago! If you have been investing since then, you’ll reach a milestone this year as long as you have consistently contributed the same amount to your investments each month.
How does the math break down? Rob explains with the typical rate of return of about 8% or 9%, it takes about 9 years to see your $100 per month investment grow by $100 per month, or your $1,000 investment grow by $1,000 per month. How can you power your flywheel? This is one episode that will get your wheels turning!Topics: Investing • Podcast