Chapter 2.ppt of macroeconomics by mankiw 9th edition
Don't Make the $1 Million Mistake
1. Don’t Make the
$1 Million Mistake-
Like I Did!
Dr. Barbara O’Neill, CFP®
Rutgers Cooperative Extension Specialist
Rutgers SEBS Personal Finance Course Instructor
3. It Will Just Take
Some Time
• Right Now: Negative Net Worth
Debts > Assets
• Later: Positive Net Worth
Assets > Debts
4. Legal Ways to
Get Wealthy
• Inherit wealth
• Marry into wealth
• Receive settlements
• Possess special talents and skills
• Develop a needed product or service
• Time + Compound Interest over decades
5. Two Key $$$ Resources
Of College Students
•Human Capital
•Time
13. Doubling Period Scenarios:
8% Interest
Early Savings
• Age 22
• Age 31
• Age 40
• Age 49
• Age 58
• Age 67
Five Doubling Periods
Late Savings
• Age 31
• Age 40
• Age 49
• Age 58
• Age 67
Four Doubling Periods
14. Let’s Back Up:
Financial Goal-Setting
• Sequential: Goal A, then Goal B, then Goal C
• Concurrent: Goals A and B and C
16. Here’s My Story:
I Practiced Sequential
Goal-Setting
Started work at Rutgers at
age 25
Did not start retirement
savings plan deposits until
age 34
Difference: 9 years
17. I Saved for Other Things
Great sports car
First house
18. Retirement Always
Seemed So Far Away
1978 2020
I’ll get to that “as soon as…”
I was even studying to be a CFP®
19. Fast Forward ≈ 30 Years
• I reached the $1 million savings mark but…
• I could have had $2 million
• 9 years of delayed savings resulted in one less
compound interest doubling period
• 9 years of delayed savings cost me $1 million
20. Don’t Make the $1
Million Mistake!
• Compound interest is not retroactive!
• Start saving for retirement as soon as you land
your first job after graduation
• Your “future self” will thank you