My $5,000 REGRET
I am an adventurous person. I’ve always looked forward to traveling to a new place, or exploring the outdoors. When I was 16 years old, my brother and I organized and planned a 5 day back packing trip on the Wonderland Trail. If you haven’t experienced it, you should put it on your bucket list. It is a 90+ mile trail that goes around Mt. Rainier. From my memory, I think my brother and I only completed 60 miles or so. We didn’t have any fancy camping gear, or money to buy freeze dried camping food, but we were determined and found a way. We borrowed a tent from a friend, used backpacks from Costco, and packed our own food, which included cans of chili. Our sleeping bags were made for the living room floor, not so much for real backpacking. We hitched a ride from a friend to the mountain, survived and had an amazing trip, despite being very ill equipped and inexperienced.
So with that kind of history, it didn’t surprise my parents that I wanted to be a volunteer missionary in South America for 18 months when I was 21 years old. I put college on hold to pursue this dream. Once I returned my father gave me $5,000 to help me get back on my feet. There was no immediate need for this money, as I had worked enough hours in the 6 weeks of being home, to pay tuition for that semester. Also, I had already obtained a part-time job as a janitor on campus, so my living expenses were taken care of. I had two semesters left to finish my Bachelor’s degree, and I had a whole summer vacation to earn money for my final semester. What was I going to do with this $5,000 gift?
By this time (2001), computers were becoming an indispensable tool on college campuses. I didn’t own a computer myself, but I was able to keep up just fine by using the computer labs on campus. However, my father mentioned to me that I might want to buy a laptop with the money. He has always been a computer geek, and loved all the new technology becoming available. I let that thought grow roots in my brain, and I ultimately purchased a brand new Dell Laptop with all the bells and whistles for $4,000. Give or take a few dollars. Can you believe the prices back then?! The other $1,000 was placed in my savings account that was earning around 3% at that time, and I’m sure it was eventually spent on another adventure somewhere.
The idea of doing school work from my bedroom was too enticing to pass up. Well, it ended up that the computer was more trouble than it was worth. It didn’t connect to the internet, because I didn’t have an internet connection at my apartment, I didn’t have a printer, it always needed an update, and it would freeze constantly. I would end up going to campus anyways to work on my projects.
Now, looking back, I can see what I missed out on with the $5,000 gift. I’m just going to give you a couple simple scenarios:
Scenario #1: Open a Roth IRA and deposit the entire $5,000
This is the easiest thing I could have done with that money. I could have let the money sit in that Roth IRA from age 23 (when I received the gift) to age 65, which is 42 years. If I invested in mutual funds, with an estimated 10% return, I would have ended up with $327,679 by the time I was 65 years old. That’s without adding to it on any level. Let’s say that I actually contributed $100 a month from then on out to my Roth IRA. That would have given me $1,102,108 by the age of 65. I wish I could be contributing only $100 a month now towards my retirement. Today, I’m having to save closer to $1,000 a month to try and catch up from previous years of ignoring my financial future.
Scenario #2: I take the advice of my younger brother and buy Amazon Stock.
In 2001 Amazon stock was selling for as low as $5.97 a share. So with my $5,000, I could have purchased 837 shares. On the last closing date of January 12, 2018, an Amazon stock share was selling at $1,305.20. Making my $5,000 worth $1,092,452 after only 17 years. This scenario makes me a bit ill. My younger brother was invested in Amazon at the time, and I never wanted to talk about stocks, as they bored me. However, had I taken the time to learn something new, and lived a little outside the social expectations for my age group, I could be a millionaire today!
So what is the lesson learned? Well, let’s go back to last week’s post about my brother-in-law who was a millionaire at the age of 34. He spent almost every hard earned dollar on purchasing ASSETS! I spent my younger years avoiding liabilities like debt, but never used my finances on purchasing ASSETS. An ASSET pays you back in the future! So again, when cash comes available, how are you going to spend the money? Are you going to purchase new living room furniture so that you can keep up with the neighbors? Or are you going to purchase an ASSET that will continue to earn you money while you sleep?