The Rule of 72 or You’re Not “Baby” Anymore

“If you want to beat the S&P 500, start thinking of the index as a filter and not a benchmark. It’s the starting line; not the finish line.” Andrew D. Ellis, Founder, ThinkingLonger, LLC

Hey — you Gen X’ers, Gen Y’s, Gen Z, millennials — it’s time to pull back the curtain and take a hard look at the money that sits in your pockets.

If you took a $100 today and invested it in an S&P 500 Index fund, it would grow on average at a rate of 10% per year (or so says Investopedia and many other sites). My young friend Polly, who always looks on the bright side, says, “So what! Listen, Andrew, after one year, maybe I’d have $110 but maybe next year, the S&P might not go up that much, or it might go down, and I might have even less. Andrew, you’re sweet but really?” Polly probably wanted me to leave her the f**k alone.

I like Polly, and she had been calling me by my first name since she was a teenager. And, I can understand her impatience with me. So, I try to frame the discussion a little differently.

“Polly, would you feel differently if I told you that the $100 in your pocket today is going to be $1,200 in 28 years? That spending that $100 today is costing you $1,200 tomorrow when you might really need it — when you’re older, when you have children, or sick parents, or you need help, when Social…