Last week they held the annual Windsor-Essex Chamber of Commerce Business Excellence Awards.
This is an event where businesses and business owners are recognized for their accomplishments.
In the past, I was “encouraged” to attend this event, as my previous employer, sponsored one of the awards.
This year I attended voluntarily.
Same event, but a different feeling when you attend because you want to be there, not because you are expected to be there…
I had three good friends who were recognized this year.
Shout out to Dan Carlini (CNC Electrical), Dan Crosby (Canadian Protein) and Jason Melo (Melo LLP).
These guys are all rock stars in their respective fields, and I was so glad to see them recognized.
It also gave me a greater appreciation for these awards.
It’s not so much about the award itself…
But I know how hard each of these guys works, and all of the sacrifice it’s taken them to get where they are.
And it was nice to see their accomplishments recognized.
Well deserved fellas!
All three of these guys made a conscious decision at one point in their lives, to go into business for themselves.
They chose to take a financial path that is less certain…
Whereas the average worker/employee opted for a more predictable path.
Earn a consistent paycheque, try to save more than you spend, and invest those savings with your bank in order to grow, and fund your retirement.
Seems pretty reasonable, right?
And maybe at one point, it was…
But unfortunately, that’s the case these days…
And here’s why…
Since the year 2000, the M2 Money Supply in Canada (new money being created and injected into the system) has grown at a rate of approximately 7% compounded annually.
That’s insane!
So if you’re earning 7% on your stock portfolio or your investments or your income growth… you’re not getting ahead… you’re simply keeping pace with debasement (i.e. our money losing value).
That means if we want to “get ahead” we have to earn more than 7% to beat the debasement of the dollar. And we have to beat it every single year.
Lets do some math…
To make numbers simple, let’s use 10% as the debasement rate.
On that basis, we would want our incomes and our investments to increase by 10% every year, in order to keep our purchasing power.
Here’s what a $60K salary has to be after 10 years to match a 10% compound annual growth rate (CAGR)?
$155,624!
LOL!
Do you know what it has to be after 20 years?
$403,649!
That’s right. To keep up with a 10% debasement rate or “hurdle rate,” your $60,000 salary has to be $403,649 after 20 years.
LOL x2!
And remember, this isn’t really to “get ahead.” This is just to keep pace with the loss of purchasing power that’s hidden in plain sight!
No wonder people are getting so frustrated!
As if life isn’t busy and complicated enough, people with no interest in the investing world, are being forced to take an interest.
And not to get ahead… but not to fall behind.
And I find that sad, because that means those same people are being taken away from productive activities, they are good at.
Activities that make them happy. Activities that contribute positively to society.
Instead, they have to spend time figuring out how the heck to grow their income and investments by 10% ever year.
And again… this isn’t to “get ahead”… this is to keep pace.
SAD!
But unfortunately, this is reality.
And avoiding this reality, only makes it worse.
But here’s the good news…
If you want to “get ahead”, it’s 100% possible. You just need to understand these concepts so you can act accordingly.
It’s why for years we’ve been helping investors earn double digit returns by investing in mortgages.
It’s also why we’ve been banging the drum and helping investors purchase smartly leveraged income real estate.
That leverage allows you to beat this debasement rate and grow your net worth.
So don’t get discouraged with all this.
It is possible to beat this incredibly high hurdle rate… and it is possible to get ahead. We see people doing it every day.
That’s enough for this week!
Enjoy your day,
Vince
