It’s clear that investing is one of the most dreaded thing in personal finance. After all, your retirement nest egg could lose 30% value overnight, if you don’t know what you’re doing.
But, I’m sure many people still underestimate the power of investing early and regularly. So I’m going to show you some statistics and a couple of myth busters when it comes to money.

How to Become a Millionaire

One of the previous lessons in personal finance school is to be a millionaire. However, most people think they could only be one by winning the lottery. Here are some interesting statistics:

The odds of winning the Mega Millions is one in 176 million.

The odds of being struck by lightning twice is one in 9 million.

You have a MUCH higher chance of being struck by lightning twice (and hopefully survive), than winning the lottery.

Don’t you think it’s time to do some real work instead of dreaming about hitting the jackpot?

What’s the Average Return of the “Market”?

The market is the S&P 500 index. If you calculate the average annualized returns from Jan 1, 1871 to Dec 31, 2009, it’d come out to be about 8.9%. $1 invested back in 1871 would turn into $137,600 today! If you ask me, it’s definitely much better than the petty 1.1% I’m getting from my HSBC online savings accounts (except that I need to have money in the savings accounts for upcoming life events).

Myth Buster #1: Invest for Retirement!

Many people think that investing is for retirement. I agree partially. It’s critical to have retirement fund waiting for you at age 65, so you can rest assured that you won’t have to sleep on the street after you stop working.

But I have trouble with this mindset. It assumes that you won’t have enough income after age 65, and that’s why you have to rely on your retirement fund.

It can’t be more wrong than that.

If you’re in your 20s, you have at least 40 years to earn more money. Even if you spend one year learning each aspect of building a profitable business (e.g. marketing, accounting, legal, product, service, etc), you will still have many years left to put them together and create a stream of income that will continue after you reach 65.

So, what do I invest for? I invest for the peace of mind for me and my family. Bear in mind that I don’t have a wife or kids yet, but eventually I will. And when that happens, I want to be able to focus on doing what I love and knowing that I have some money saved up somewhere in case I screw up.

The wealthiest men always have some sort of protection for their wealth. They do that by buying insurance and similar financial products. They gotta have some sort of survival money, before they could go on and earn more with their extra money (or “play” money).

My summary: it’s critical to have retirement fund waiting for you, in case you don’t get rich.

Myth Buster #2: Live Below Your Means!

You always hear people saying, “Live below your means. Live below your means…”

Yeah right, and then when you retire, you really have to live WAY below your means.

BS. I say, you want to live beyond your means! Because that’s how you condition yourself to always figure out ways to earn more money. If your mindset is fixed, you will always live below your means.

I know what you’re thinking, “It’s impossible!”, right?

Unless you want to take out credit card debt (which will come back and haunt you later), how else would you be able to live beyond you means?

I have a solution for you:

Earn money on the side.

There are a gazillion ways to earn money on the side. You can do that through freelancing, selling digital products, blogging, writing music, tutoring, etc etc etc. In my free report, tactics no.4 to 7 are specifically dedicated for earning money on the side. You can download it here.

My summary: it’s important not to overspend, but always try to find a way so you can make more money and improve your lifestyle.

Do you have any myth busters or statistics you want to share? Leave them in the comments below!

The Personal Finance School Series:

1. Personal Finance School: An Introduction to Effective Personal Finance

2. Cash is King, Net Worth is Queen

3. Why and How You Should Kill the Debt Monsters

4. Personal Finance Automation: The Art of Doing Nothing with Your Money, or Not?

5. How You Can Spend, Save, and Earn Half A Million Dollars

6. Your Money Will Work for You 24/7, If You Are Willing to Work FIRST

7. Why Investing Deserves Another Round of Lesson

8. The Most Important Personal Finance Lesson of All…

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