David Bach is a trusted financial expert and the author of several bestselling personal finance books, including “The Automatic Millionaire” and “Smart Women Finish Rich.” In addition to reaching millions through his books, Bach has shared his money advice as both a television and radio host. He has been a contributor to NBC’s “Today Show” and hosted the radio shows “The FinishRich Minute” and “Finish Rich With David Bach.”
Bach is also a motivational and financial speaker, and has created the FinishRich Seminars, which have been taught by thousands of financial advisors throughout North America. He is the founder of FinishRich Media and the co-founder of AE Wealth Management.
Previously, Bach was a senior vice president at Morgan Stanley and the vice chairman of a nationally recognized RIA.
Why He’s a Top Money Expert:
Bach is one of the bestselling financial authors of all time. He has written 10 consecutive New York Times bestsellers and 12 Wall Street Journal bestsellers. His books have been translated into 19 languages
What’s the one piece of money advice you wish everyone would follow?
The biggest advice I give is to automatically pay yourself first [the equivalent of] one hour a day of your income. If you start when you are young, becoming financially free is easy.
Here’s some simple math: Save $10 a day — $300 a month — for 40 years and earn 8% [interest] — less than a boring balanced account has earned over the same time — and in 40 years, you could have $932,603. That’s $10 a day.
What happens if you wait 10 years? Good question — you will have less than half the amount: $407,819. What if you wait 20 years to do this and only can save this amount for 20 years? You will sadly now only have $164,743.
The moral is don’t wait. Start now, start today.
What’s the most important thing to do to build wealth?
Use the power of compound interest to you help you and your future self build real wealth and financial security. Wealth is built in decades, not days.
In decades, the miracle of compound interest is truly hard to imagine for most people. Try this math on for size: $500 a month — less than a typical car payment — invested in 40 years at 8% could be worth $1,554,339. That takes $16 a day of savings. That is for most people less than what they earn an hour.
It can be done. It must be done and you must be the one to actually do it. No one is coming to save you. Trust me on this, no one is coming. The government is not going to be there for you when you need the money and want to one day stop working.
What’s your best tip for fighting the impacts of inflation?
[There are] three critical things to remember.
First, remember that the most important feature of investing is ROC, which stands for return of capital. You want the money you invest to come back to you.
Second, you need to invest in stocks and real estate to build financial freedom. These are the two primary asset classes that build massive wealth long term. For retirees, right now this is the best time in decades to buy fixed-income investments. You can easily get a guaranteed return of 4% to 6% safely, and that is incredible for retirees.
It’s also critical you make money on your cash. This is the best time to get a good return on your cash, again, in nearly 20 years. We are back to money markets paying over 4% to 5% and that is simply incredible, so make sure your cash at the bank is making money or move it!
What’s the biggest mistake people make when it comes to money, and what should they do instead?
The biggest mistake other than not paying themselves first and buying a home is trying to get rich quickly. The fast way to stay broke long is to try and get rich quickly. Trust me, it looks easy until it isn’t easy.