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Monday, March 07, 2011

iPhone Millionaires

Though this is a funny comic strip, it is actually sadly pretty true. If people (including myself) could learn to save their money and invest wisely, the whole world could be much better off.

The one story to me that is most sad is the young military folks that are signing up to rejoin or 'up' their contracts with the US Army, Navy, Marines and Air Force. Those young men and women that decide they are willing to sign on for 4 more years, or more, are given a big tax free check from the government. If they are in a combat zone, they are given a bigger check.

The kids get $50-100K in cash and then within a few months they have spent it on the top of the line pick-up trucks, new sound and video systems, enough parties and booze for their buddies, and of course time with the women.

If you think about what they should do with the money, or if Uncle Sam was looking out for them they would come to these kids and tell them that they could either get a new truck, or they could have $1MM when they retired at 65. With compounding 5% annual interest on the money (assuming they have no other bonuses that are paid out or they don't get more money when they re-up again) the total they would have in the bank when they were 65 would be $995K and if they could get 8% interest on their money, they would have $3.7MM in the bank.

I think it is up to the military to help these kids out. I wish I had this help when I was a kid, and if someone had given me $50k in an account when I was 20, I could be in good shape right now for retirement when I turned 65, or even 60.

This is the stuff that I wish Obama would do and step-up to make changes.

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