Saving and investing in ipos via dollar-cost averaging and compounding.
Exhibit 1
A survey recently found out that there are over 13.6 million households that have a net worth of $1 million or more, not including the value of their primary residence.
With so many millionaire households, the goal of becoming one of them looks within reach. To see what might be done, imagine yourself: what if somehow you were, say, 30 years old, earned $200,000 a year, and could save an extra $20,000 a year and buy shares in the PRE IPO CLUB Accumulation Plan at the end of each month?
Exhibit 1 shows a graph of the cumulative returns for the private equity composite and the public stock benchmark.
Annualized returns for the entire 21-year period are reported.
Compared to the 6.9% annualized return for the public stock benchmark, the 11.0% annualized return for private equity over the entire 21-year period is impressive.
Then, following our example, after 32 years, you could retire at age 62 with $5 million.
Exhibit 2
But where do you find that extra $20,000 each year? There are numerous guides on the internet on how to save money. They include the usual common sense advice, such as recording your expenses, including savings in your monthly budget, and finding a way to cut spending.
I have a telling story about that last suggestion, the one that certainly made you smile when you read it.
I am not talking about making your own soap or vegetable stock to freeze (though some people do, and it tastes delicious).
Here is an example from real life.
In 1991, when I was 18 and got my driving license, I was into cars.
Cars were a necessity to become a man and assert oneself in society. Just at the same time, the father of a friend of mine, who was better off than me at the time, and had two menswear shops in town, bought a Mercedes 380 SEC. I remember talking with my friend about his father’s purchase of the Benz, and I remember saying, "Why did he not buy a top-range 560 SEC instead?" In the 1980s, this car was a status symbol. It was long, sleek, aerodynamic, and luxurious, and it was made to show speed and status.
My friend casually told me, “It isn’t that he can’t afford it; he’s just being clever with the money and more stylish in a way.” The statement about style stayed with me my entire life.
There was something classy and appealing about choosing the less flashy model, but as I got older, I realized the math behind being "smarter" with purchases.
The price difference between the two models was exactly $20,000, and that was exactly 32 years ago, as in my previous savings example.
Also, the projected returns were similar as they invested in private equity to fund the expansion of their clothing brand. The financial choice of driving the exact same car with slightly less status is now worth over $5 million to that family. And guess what? The family owns shops in four cities, including one on Madison Avenue in New York.
At PRE IPO CLUB, we've become experts in five areas, including software and artificial intelligence. These verticals are supported by different mega-trends, and we choose market leaders that are expected to go public in the next 24 months.
We are picky with names, and we speculate on valuations. Request our Live Deal Monitor here
