Here’s the Truth About the #1 Investment Myth Your Financial Advisor Tells You
Financial advocate, Garrett Gunderson, recently pointed out a strange truth to us at the EVG Research Team. He said…
Pick a financial advisor, any financial advisor, and I bet they can tell you who made this statement.
“Compound interest is the greatest invention the world has ever produced.”
“Albert Einstein!” they’ll say.
The only problem is, the quote is a fake. It’s not true. And as far as anyone knows, Albert Einstein never said it.
Garrett Gunderson points out that Albert Einstein
never said this quote, despite what many financial advisors say.
In fact, the first recorded instance of a similar line was in a 1916 newspaper advertisement for Security Investment Co.
Here’s the original line in its entirety:
“Finally he said: ‘Gentlemen, if the man who invented compound interest had secured a patent on his idea he would have had without any doubt the greatest invention the world has ever produced.’”
(Taken from “The Greatest Invention,” an advertisement for Security Investment Co on page five, column three of the June 28th, 1916 issue of the Riverside Daily Press.)
They were using the line to sell investments then, and it’s being used to sell investments today — namely mutual funds — nearly 100 years later.
The Seductive Temptress Named Compound Interest
Financial advisors love to use this Einstein misquote about compound interest because it’s their #1 sales argument for convincing you to buy Wall Street mutual funds with your IRA or 401(k)…
…and to continue buying into those funds for 30 years straight.
After all, the commission for delivering a customer who will be around for 30 years is fairly large.
So let’s take a moment to dig deeper into the financial advisor’s #1 sales argument.
For those who need a refresher, compound interest is when the interest your money earns is automatically reinvested to earn even more interest.
When you put theoretical numbers on a compound interest chart, it looks like this:
If You Invest $5,500 Each Year for 30 Years, Totaling $170,500,
It Will Turn Into $732,674 If You Earn 8% Annual Compounding Interest
Financial advisors love to show these charts when making their sales pitch because they look so seductive on paper. Who doesn’t want to end up with a mountain of money?
But there’s a problem with these clean-looking charts.
The Trouble With Compound Interest
The truth is a lot messier than these charts show.
A lot can happen in 30 years — just imagine where you might be…
Today you could be single with no kids, but in 30 years you could be a Grandma or Grandpa.
The United States could elect 7 new women Presidents in the next 30 years.
Saturn will have circled the sun one more time, and the iPhone 25 will be sewn into your clothes and also function as a jet pack.
Do you want to lock away all of your investment money into a mutual fund that invests in companies you don’t control, understand, or even know if they create any real value…
…and do you want to do this for 30 LONG YEARS before discovering if this plan will actually work?
There are more reasons to be skeptical.
Life Doesn’t Happen According to a Chart.
Take a look at stock market returns since the year 2000.
Adjusting for inflation, the market is only up 8.4% over the last 14 years. That’s a lousy 0.6% return per year.
How does your compound interest chart look when earning 0.6% per year?
Just because the historical return of the market may be 8%, doesn’t mean it will continue to return 8%.
Especially when the global economy has changed so much since the financial crisis started, and many more changes are sure to come in the next 30 years.
These charts also don’t factor in emotions and human error.
Many people who lost more than 50% of their 401(k) or IRA during the financial crisis panicked and pulled their money out of the market at the bottom, and never put it back in.
They missed out on all the gains as the stock market recovered, and they don’t have another 20-30 years to earn it back.
But who can blame them? This was never an investment strategy they were supposed to understand to begin with.
It was all about blind faith.
A New Investment Plan Built Around YOU
The real problem with compound interest is that you have to put your blind faith in someone else’s strengths and vision… and you have to do it for 20-30 years to see the results.
That means you only have one shot to hit or miss your investment goals, and you don’t get another try.
At The Elevation Group, we do things differently. We teach people about tax-advantaged cash flow investments.
And one of the many strengths of tax-advantaged cash flow investments is that when the cash flow shuts off, you immediately know there’s a problem and can change course.
You don’t have to commit for 30 years, blindly hoping it all works out in the end.
Garrett Gunderson, a brilliant financial mind, understands this concept well.
Garrett has become a financial advocate for those who are DONE being herded into traditional investment plans that make Wall Street rich… REGARDLESS of whether you win or lose.
He doesn’t believe in committing 30 years to find out if your investment strategy will work.
And he doesn’t believe in making investments that you don’t understand and that do not cater to your personal strengths.
Instead he helps people create wealth strategies based on what he calls your personal Investor DNA.
In our new lesson with Garrett, he shared 5 steps for possibly earning an extra $500/month, just by rearranging your finances, and without increasing your income.
That money can then be used to start making investments that match your strengths, leave you in control, and can deliver tax-advantaged cash flow.
The lesson is available to Elevation Group members right now inside the private members area. (EVG Members: Click here to access the lesson now.)
To find out more about membership, click the link below for a free presentation on what The Elevation Group is all about.
Your Partner in Prosperity,
The EVG Research Team