Robert A. Bonavito, CPA PC

How to Become a Millionaire Through Investing

Hi, Robert A. Bonavito here, New Jersey Forensic Accountant. Today we're going to talk about a topic that I typically don't talk about. It's not going to be about forensic accounting, it's not going to be about matrimonial accounting, forensic reports, valuations, that type of stuff. Today we're going to to discuss which is a big part of our practice is, testifying about investments, whether it's made by a broker or an individual who wasn't happy with some of the investments. We do a lot of this analysis and we came up with a methodology based on this testimony of a way to invest that will earn…it's very simple and everyone can do it pretty much and it can earn...the returns are amazing, I'm going to go through this now with you rather quickly. But generally, there's three requirements for this methodology to work. It needs to be needs a tax efficient vehicle, it has to have a low-cost investment and it has to...needs to be dollar cost into investment and earn a market rate of return.

Sounds complex but it's not complex because I'm going to walk you through this whole thing. Now, this is your goal and this is how the investment generally works. Now, remember what I'm about to tell you, you're not going to hear from your investment broker, you're not going to hear from a hedge fund manager, you're not going to see on one of these television shows about investments. No one is going to tell you this and go through this because what I'm going to tell you, it works every time and it's very low cost and no one makes money except for you. And that's why no one's going to spend the time to go through just like I am with you. Now, you could see on this spreadsheet here where we have a return of 11%, age, year opening balance, contribution, appreciation and account value. Now, basically what this sheet is telling you is that someone started investing at age 20 and he put in $5,000, and here's the earnings which is 11%. And they kept on putting this in for 11 years, only 11 years, $5,000.

I know what you're saying, "Okay, Robert, they put in $5,000 for 11 years and earned 11%, I can't earn that type of money." I'm going to walk you through this and you're going to see how you can earn this type of return. And remember, this is only $55,000, it sounds like a lot, but it's basically $100 a week and you don't necessarily have to put in the money, this is just an example. Maybe you could only do $1,000, maybe you only can do $2,000 a year but this is only for 11 years. And so what do you think that if you did this you'd have at the time you retire? What do you think you'd have at the time you retire? Well, it's $55,000, so you maybe have 110,000 when you retire, maybe you'd have...let's be crazy, let's say 500,000 or a million, right? If you did this for 11 years, and you earn this rate of return, when you retired, you would have $5 million. And if you're in 10%, you would have 3.4 million, if you are 9, you'd have 2.3 and it goes all the way down to only $600,000. Now, you have to realize that right now you are contributing to a government required retirement fund called Social Security. It's basically annuity where they take 7% of your pay and a company matches that and every year, you're putting in 15% into this retirement plan.

But the unfortunate thing with Social Security is, most of that money, the principal and interest you're never going to see, because it gets lost in bureaucracy. So, when you retire, even though you're putting all that money in a government plan, you're not going to have anywhere near this type of plan, okay? This is based on market forces, this is something you're going to do with yourself, it's not government controlled, this is your money and this is your investment. And that's the difference between a free market and government control. So, even though you're putting Social Security, you could put this in on top of that, and I recommend it. So, let's just go into a little bit more detail here because, okay, we understand what the three requirements are, right? Tax efficient vehicle, low cost, market rate investment. And what I'm going to do, I'm going to go into the Vanguard funds and use this as an example because it's convenient. Not that you should use this, there's other companies but remember, if you could find a cost-efficient vehicle, you should use that. Now, I'm not going to go into detail about risk and return but this page here you have a link to it, it's on this page, you can copy the link and you can get to this bank or page. And this is some of the investments that Vanguard offers.

And you could see like in the beginning here, the rates are 4%. This is the inception, 10 year, 5 year, here's the name, the fees, it tells you the returns. You could see some of these returns are pretty low, 5%, that's not bad. Some of these are 7% but when you get down to other investments, like Large Cap US Stock Funds, you can see that these funds here, the rates are a little bit higher, right? Ten percent and let's say we were going to invest in the Windsor Fund, which is a large-cap fund, right? Here's the expense ratio, 0.31%, which is one-third of a percent. That meets one of my requirements, and here's the annual return which is 11%, over 11%. So, if you did this for from age 20 to retirement, you would have over $5 million. And that's what I said I'm going to show you how to do this. And here's the other returns, 10 year was 14% and it fluctuates, even this one year, you lost money, and that's the risk portion. But if you do this over a longer period of time, you're probably going to hit this mark. And here's some other funds down here, and you can see some of these other returns are pretty good too. Like this one here is 13% and remember, these are very low fees, very low. No investment managers that are charging these type of fees.

So, once you pick out a fund, you're going to go to the next page that I gave you, again, you have a link to it, it's also on the Vanguard web, and here's the page. And you could see here they talk about the Roth IRA and that's the vehicle I would recommend you use, why? Because this page goes into it, and I have another video I'm going to do on the Roth, but the Roth is awesome, it's great. Ninety percent of the people out there can contribute to a Roth, 90%. I can't, unfortunately, I don't meet the requirements, but most of you will. Now, here's some things, no R&D, what's R&D? No required minimum distribution. Age limit? None. It doesn't matter if you're in a 401K, you still can contribute to this plan. A Roth IRA basically is you could put money into it, okay, that money accumulates tax-free, and when you retire, you can take the whole thing out tax-free, and you can also take the principal out prior to retirement. Think about that, this is an awesome, awesome vehicle. And if you do this, you will get the $5 million we're talking about.

Now, all you do is you click on this open your IRA, right? It takes you to this other page here and you will link this to your bank account once you pick out the fund and then you'll have them take the money out of your checking account by the fund, and from then on forward, what you'll do is, you'll dollar-cross the average. If you could put $100 a week, you do it, if you can put $5 a week, you do it but start this right away. I have college students come to me and they say, "What should I do?" And I tell them, "Listen, set this up the same methodology," I said, "Set it up, put only $5 a week or $5 a month, but get it started and when you can ramp it up, ramp it up. Because if you do this, it will work, there's no...the fees are negligible. It's ridiculous, it's all tax-free." This investment here is life changing and there's only a handful of people that do it and that know about it. Listen, guys, if you have any questions about this, just leave a message on my YouTube channel or better yet, you know, when I talk about the Roth IRA and some other things, you may wanna subscribe to my channel so that you can learn about that in more detail. But this is a quick overview, it's simple, I took you through it quickly but it will work. Any questions, let me know. Thanks a lot, guys.

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