Warren Buffett and Bill Gates have lost billions. Others have blown millions. But this the fastest way yet we've seen to lose a million dollars.
The plunging stock market of 2008 has brought many high fliers back to earth. Even the richest and most successful investor of all time, the incomparable Warren Buffett, lost a cool $25 billion in 2008. Still, with a fortune estimated at $37 billion, at least he can afford to lose $25 billion.
That is more than can be said about an Israeli woman only identified as Anat's mother. According to a report on bbc.co.uk, Anat had bought a new mattress for her mother as a surprise and threw away the old one. But when the older woman returned home she "almost fainted", as she had hidden her entire life savings of $1m inside the mattress.
A search of three landfill sites has so far turned up nothing. It appears the loaded mattress has been shipped to one of two larger landfill sites, along with another 3,000 tonnes of rubbish collected that day.
Jump On A Plane Now
Now before you jump on a plane and head to Israel, complete with gas mask, wellies and a few cans of deodorant, it's worth considering the following points…
- By the time you get there, another 9,000 tonnes of rubbish will have been collected, and be rotting away on that landfill site.
- Many other 'gold diggers' will likely be there before you.
- Even if you did find the dosh, the chances are you'd be forced to hand it over to Anat's mother anyway.
- There is a chance Anat's mother may have over-estimated the amount of cash stashed in her mattress. If she did have a million dollars hidden in her mattress, it would either have to be an unfeasibly large mattress and/or give her an extremely uncomfortable sleep each night.
Never again should we use the term "at least your money is safe under the mattress."
An Even Bigger Mistake
In trying to help out her mother, Anat has inadvertently made a big mistake. But the even bigger mistake was made by her mother. Apart from the obvious security risk, the other major mistake was that all that money was earning a 0% return.
I'm presuming it took Anat's mother a lifetime to accumulate such as vast amount of money. Assuming it has taken her 40 years, she'd have had to save, on average, $25,000 every single year. Or else, and this is far more likely if we are to believe there was $1 million inside that fateful mattress, she'd had to have inherited the vast majority of the booty.
Most of us will never accumulate such vast sums of money. Without an inheritance, or winning the lottery, we have virtually zero chance of getting anywhere near $1 million, or £700,000, simply by stashing the money under the mattress. Over a 40-year working life, it would require you to save £17,500 each and every year.
The Easy Way To Make A Million
There is an easier way. Courtesy of the miracle of compound returns, you can get much closer to accumulating $1 million, or £700,000, that you'd have otherwise ever thought possible.
If you managed to save £200 a month, every month for 40 years, and earned an 8% return over that same time, you'd accumulate just short of £700,000, or $1 million.
Now £200 may sound like a lot of money to save every month. After all, you've got the mortgage to pay, kids to feed and clothe, train fares, car insurance etc etc etc. But how about if I asked whether you could find £6.67 a day savings out of your usual daily expenditure?
Could you give up a Starbucks coffee and muffin? Make your lunch rather than buying it at the local sandwich shop? Trade down or give up your Sky television subscription? Save on your next car insurance renewal by shopping around rather than simply staying with your existing insurer?
It IS Possible To Accumulate Great Wealth
It is possible. By contributing £200 a month into a low cost index tracking fund, you could accumulate £700,000 over a working lifetime. Even if you don't have 40 years of your working life left, like me, you can still make regular contributions into the stock market.
The last 18 odd months haven't been too kind to stock market investors, but over the past 100 years, it has consistently proven to be the best long-term vehicle for great wealth accumulation. Just don't expect to get there by leaving your money under the mattress!
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