Saving money is hard as you grow older. Getting married, having kids and their expenses, needing a car and taking care of the parents. How the hell do you find large sums of money for investing to grow your wealth?

6 years ago, I came across Richard Russell’s 4 valuable advice to folks all walks of life. The one that left the greatest impression was the difference between an investor who starts investing at 19 years old and stops at 25 years old, versus one that invest the same amount from age 26 all the way to 65.

Their record would have been equal.

Achieving the rate of return is the key, and probably what we discuss more on this site. This week, I cam across an article by Andrew Hallam, who wrote millionaire teacher. The key takeaways are a few things

- We know that he does low cost indexing and rebalances his portfolio
- We know the market moves in rough 20 year cycles. What are the chances after 45 years your money doesn’t grow? How about 39 years for the Investor A?
- In today’s way of living, your dollar is going to be divided into more things that need your attention. If you want to make sure you got enough for retirement, perhaps it is imperative that you start at an early age (18?)
- How many 18 year olds know this concept?

“Fifty six percent of 18-34 yr olds say they’re saving $0 for retirement! (via cnnmoney.com) How can young investors be encouraged to think long term?”

The answer is really easy. To get young adults to think long term, they should strive to be lazy and spend more of their income during their lifetimes. Who wants to scrimp in their 20s, 30s and 40s, so they can have bucket loads of money in their 60s, 70s and 80s? What a waste.

I’m talking about spending more money during a working lifetimes AND ending up with more money for retirement. Here’s an example:

Joe Smith studies law in college.He becomes a lawyer at age 26, but he doesn’t know how to be lazy. So he spends the money he makes. OK, this might not make sense if you’re a “worker” who’s used to his or her nose on the grindstone, but stay with me.

Joe starts saving at age 40 for his retirement. And he socks away $2000 per month for 20 years. In total, he “saves” $480,000 ($2000 per month x 12 months x 20 years). That’s a lot of money to save. And what Joe saves, he doesn’t get to spend.

If he makes 8% per year on his investments, he’ll grow his savings to $1.18 million. The poor guy isn’t much of a thinker. To build a $1.18 million investment portfolio, he has to save $480,000 of his salary.

Call Joe a sucker for punishment.

Tim isn’t really smarter than Joe.But he’s lazy.There’s no way he wants to save $480,000. He works at the same law firm as Joe, makes the same annual income, but wants to spend more over his working lifetime AND end up with more money than Joe.

Tim starts investing just $200 per month ($6.66 per day) at age 18, which he puts together from the odd weekend job. From age 18 to 26, he keeps investing the same amount. If he makes 8% per year on his investments (the same return that Joe makes) he’ll have $27,570 at age 26.

When the law firm hires Tim (at age 26) he starts investing $600 per month and keeps it up until he’s 60. He earns the same salary that Joe did.

By the time Tim is 60 years old, he has $1.6 million—nearly half a million dollars more than Joe.

Tim ends up with $1.6 million, compared to Joe’s $1.18 million.But Tim was able to spend nearly $100,000 more than Joe while he was working…on fun things, like holidays, toys, and dinners on the town.

Joe is a worker. He saves more and ends up with less money.

Tim is lazy. He saves less (spends more) and ends up with nearly half a million dollars more than Joe.

It pays to use your head and be lazy, like Tim.