One effective way to gauge the reception of your speech is by observing the audience’s reaction as you make your way back from the podium. If you have delivered an exceptional speech, you will notice most individuals at the end of the aisles looking at you with genuine smiles. Conversely, if your speech fared poorly, they will divert their gaze, much like a jury does when delivering a guilty verdict.
Several years ago, I had the opportunity to speak at an event attended by approximately 400 individuals, who were predominantly older. Their main purpose for attending was to learn the secrets of building a $10 million portfolio. During the introduction, the emcee informed the audience that the speakers would be providing them with numerous million-dollar ideas.
As anticipated, they expressed visible disappointment with my contribution.
What I spoke about was something I have emphasized for as long as I have been writing on the topic of wealth creation: Unless you have a minimum of 30 years for compounding interest to work its magic, investing in stocks alone will not pave the path to wealth.
Illustrating this concept, I conveyed:
The investment industry, encompassing brokerages, private bankers, insurance agents, and investment publications, is a vast and tremendously profitable sector that provides a generally valuable service. However, it is populated by smart and ambitious individuals who perpetuate a small but consequential falsehood.
The lie perpetuated is the notion that by investing in stocks and bonds, anyone can become wealthy in less than 30 years.
It is not an overtly malicious lie. There is considerable evidence displaying that strategic investments can yield returns surpassing costs (such as brokerage fees, management fees, and subscription fees) and even generate positive returns after accounting for inflation. Nevertheless, time is a crucial factor.
For instance, let’s consider a scenario where you begin with an initial investment of $50,000. Furthermore, you adhere to a tax-deferred investment strategy, proven to consistently deliver an annual return of 10 percent.
After 10 years, your $50,000 investment will have grown to $129,687. After 20 years, it will have expanded to $336,375. Finally, after 30 years, it will mature to $872,470.
While $872,470 may provide an annual income of $87,200 for a decade, this would ultimately amount to approximately $65,000 after taxes. While this income is acceptable, it falls short of the definition of wealth.
Furthermore, considering one’s limited time span, waiting for 30 years before being able to utilize that income would not be a viable option. So, what is a sincere seeker of wealth to do?
Unfortunately, this was not the response they had hoped for. These retired or soon-to-be retired individuals, fatigued after years of strenuous work and poor investments, had attended with the aim of learning how to create a $10 million portfolio. They yearned for million-dollar ideas, the promise of a 10,000 percent return on investment, something they had chased throughout their lives. They wanted it immediately. Regrettably, the best I could offer was an idea with the potential to double their money over several years.