By Sara Bachelder
Building and maintaining wealth isn’t just about earning more money or investing your money, it’s about understanding the rules about how money works.
Have you ever wondered if there is something wealthy people know that the average American does not? For veterans transitioning to civilian life, these insights are especially valuable.
The 3 Real Secrets of Money are fundamental principles crucial to long-term financial success:
- Never lose money.
- Pay as little tax as legally possible.
- Never stop the compounding of your money.
The first principle, never losing money, is perhaps the most vital. While investors, including veterans, often focus on potential returns, protecting against losses is equally important.
When you lose 50% of your investment, you need a 100% gain to break even. This emphasizes the importance of thorough risk assessment, diversification, and avoiding emotional investment decisions. Veterans can apply their strategic training to prioritize capital preservation through careful asset allocation, proper insurance coverage, and maintaining emergency reserves.
The second principle focuses on tax efficiency: paying only what’s legally required. Tax planning should be a year-round strategy, not just an April consideration. For veterans, this includes understanding both civilian and military tax benefits, maximizing contributions to tax-advantaged retirement accounts, and strategic timing of investment sales. Working with qualified tax professionals can help identify legitimate deductions and credits while ensuring compliance with tax laws.
The third principle, maintaining compound growth, harnesses what Einstein allegedly called the “eighth wonder of the world.” When returns generate additional returns, wealth can grow exponentially over time. Breaking this cycle by withdrawing funds or interrupting regular investments can significantly impact long-term results.
Consider this: $10,000 invested at 7% annually becomes $19,672 after 10 years without withdrawals. However, frequent interruptions to this compounding can reduce returns dramatically.
Successfully implementing these three principles requires discipline, patience, and often professional guidance. While markets may fluctuate and economic conditions change, these fundamental secrets remain constant. Veterans can leverage their military discipline to focus on these principles, building and maintaining wealth more effectively over the long term.
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EDITOR’S NOTE: Sara Bachelder is a retirement planning specialist trained under Shirley Luu, a nationally recognized expert in financial planning. Sara provides personalized guidance on maximizing military retirement benefits, optimizing TSP investments, and integrating other sources of retirement income. Her goal is to empower veterans with the knowledge and strategies necessary to achieve true financial freedom.