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Say No To Slowlane posts / topics

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MJ DeMarco

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Flag Slowlane posts / topics

Although I haven't spent much time here in the past few days, I've noticed an increase in slowlane postings/topics.

If you think a topic/post is SLOWLANE, label it with the "Slowlane" icon below, now available in the smiley menu. Slowlane = Compound Interest Tables, Saving 10% of what you earn, Mutual Funds, Plans that take 30 years to realize, "Retiring at 65 with millions" -- pure blah.

:slow:
 

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Sid23

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rep speed ++

PS. Great post.
 

JScott

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Hey, there's nothing slowlane about compound interest tables!!!

If more people realized the difference between earning 8% and earning 30% on their money, then more people would laugh at diversifying their money in the stock market and would start looking for *real* investments... :fastlane:
 

Diane Kennedy

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Hey, there's nothing slowlane about compound interest tables!!!

If more people realized the difference between earning 8% and earning 30% on their money, then more people would laugh at diversifying their money in the stock market and would start looking for *real* investments... :fastlane:
JScott - I agree with you. I just posted on my other thread where I got accused of creating a slow lane post. Work with compounding interest, not against it. That's my belief, but hey whatever - if people want to make it harder to get and stay rich, fine.

MJ, it's your forum. Whatever you want it to be, it should be.
 

Rawr

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I think what he means is that you should be taking that money and build new things that make more money.
 

kurtyordy

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I agree it is not slowlane or fastlane, it is just a tool to figure future value of your money no matter what you are invest in.

I had heard this one before, one thing that confuses me is its workings with higer interest rates. i.e. 72% interest does not double your money in 1 year, 36% does not double your money in 2 years, and 24% does not double your money in 3 years. Maybe it is only a slow lane tool, meaning it is only accurate when you are factoring slow lane returns amounts, i.e. less than 20%.
 

Nate

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They aren't saying that a 72% return in a year doubles, because it obviously does not. $100 turned to $172 in a year is not double.

The rule is that you take the magic number 72 and divide it by the yearly return, say 12% return), you will get the number 6. So this investment will double your money in 6 years.

*Now I am starting to doubt myself. Is that right?
 

kurtyordy

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yes, but to test it, take the magic # 72 and divide by 72% return which would equate to a 1 year doubling by that formula, so I was just commenting on the flaw in the magic. Maybe it is just a rough guide, and that I can accept, but formulaickly(new word, I should copyright) it is flawed.
 

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MJ DeMarco

MJ DeMarco

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Hey, there's nothing slowlane about compound interest tables!!!

If more people realized the difference between earning 8% and earning 30% on their money, then more people would laugh at diversifying their money in the stock market and would start looking for *real* investments... :fastlane:
I think you (and others) have it misconstrued however I think under it all, we will agree. In fact, the *real investments* you cite above itself is the fastlane (business, real estate) - compound interest should NOT BE YOUR PLAN - compound interest should be your ACCELERANT.

Show me a self-made 25 year old worth $10,000,000+ plus who's source of wealth was a product of compound interest and Ill show you a liar. Compound interest used alone as a wealth generator, is slowlane - used in the fastlane, it is an accelerant. These are TWO ENTIRELY DIFFERENT THINGS.

The goal of this forum is not to work your life away WAITING for compound interest to work. For those of us who have acquired millions in early in life can use compound interest NOW, vs later.

Have I said DON'T USE IT or it doesn't work? Hell no!

However, if you're working at Sears as the store manager and your "plan" is to work and save while leveraging the laws of compound interest, you're not living in the slowlane, you're dying in it.

I don't understand why people get all bent out of shape about it and try to view this as a vindictive attack on the law -- just because its slow doesn't mean it doesn't work. I have a degree in Finance; I know the difference on a 5 year return of 5% vs 50% - the flawed logic is a 50% yield is only available to those investing in the fastlane (business, real estate) -- you can't buy a 50% yield CD at the bank.
 

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MJ DeMarco

MJ DeMarco

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Peter, I need help in here.
 

Rawr

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I am glad I am not the only one who read "The Millionare next door" and was perplexed. I didn't want to be wealthy when I am barely able to walk, nevermind skydive out of a convertible and land on a yacht.

The funny part was the notion that rich people buy cars by the pound. Incredible! MJ, so how long did it take ya to sit there and go "Hmmm.. this Lambo is more per pound than this lambo.. I think Ill take the one that weights more!" :rofl:

The point (at least for me) is that by planning on saving forever and EVENTUALLY enjoying it you are subconsciously setting yourself up for a slowlane life.

We brought up some things that are slow lane already..but how about fast lane specifics?

In my opinion:

Building a business.

Trading stocks actively with big bets.

Street Pharmacist :confused: .. uhh who's got next
 

JScott

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I know the difference on a 5 year return of 5% vs 50% - the flawed logic is a 50% yield is only available to those investing in the fastlane (business, real estate) -- you can't buy a 50% yield CD at the bank.
I *think* this is the source of the confusion. Perhaps when you think of "compound interest," you are solely referring to investment vehicles that have a guaranteed fixed return (and that return is generally an interest payment). For those types of investments, you won't see returns much greater than 8-10% (that I know of).

On the other hand, some of us are use the term "compound interest" or "compound return" to refer to the growth of investment and reinvestment into *any* investment, not just fixed-income investments that return low rates of interest.

For example, if Microsoft is continuing to grow at 25% year-over-year, Bill Gates will continue to see his net worth compound at that rate. And using compound interest tables, Bill can be amazed at how much he'll be worth in a couple years... :)

I'm guessing our disagreement is more semantic than anything...
 
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MJ DeMarco

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I *think* this is the source of the confusion. Perhaps when you think of "compound interest," you are solely referring to investment vehicles that have a guaranteed fixed return (and that return is generally an interest payment). For those types of investments, you won't see returns much greater than 8-10% (that I know of).

On the other hand, some of us are use the term "compound interest" or "compound return" to refer to the growth of investment and reinvestment into *any* investment, not just fixed-income investments that return low rates of interest.

For example, if Microsoft is continuing to grow at 25% year-over-year, Bill Gates will continue to see his net worth compound at that rate. And using compound interest tables, Bill can be amazed at how much he'll be worth in a couple years... :)

I'm guessing our disagreement is more semantic than anything...
We don't disagree ... I agree totally with your statements. The key element of your comment however is that Bill Gates enjoys a 25% return .... from what? Bank CDs? Mutual funds? The answer is NO -- the return comes from his business which allows him to tap into compound return at an impactual rate where compound return/interest is actually effective in the short term.

When the gurus speak of compound interest, its typically married with 401K's, stocks, bonds and mutual funds which serve as primary wealth vehicles of the middle class. I'm trying to move away from the standard "save money at your job, invest in mutual funds, and by golly, at age 65 you'll have $2.2 million and live a nice, safe, secure retirement." Pardon me for being frank, but that prescription sucks and its being SOLD everywhere.

What I'm trying to say (and I did a poor job of it early) is that compound interest as its typically discussed malaise, is slow lane. If you divorce it from the standard 8% yield instruments and unlock its potential with business and real estate, then it becomes a faster, powerful tool.
 

Nate

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Compound Interest.

Sounds like that lady that came and talked to us employees about our 401k options.

I made $1.67 last quarter in my retirement plan. I've only had it for 6 months, but even with compound interest for the next 40 years, I can't see that thing growing to more than $15,000 at that rate.

No thanks on the 401k.
 

JScott

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What I'm trying to say (and I did a poor job of it early) is that compound interest as its typically discussed malaise, is slow lane. If you divorce it from the standard 8% yield instruments and unlock its potential with business and real estate, then it becomes a faster, powerful tool.

Absolutely agreed...in fact, wrote a blog post yesterday about this yesterday; too many "gurus" talk about compounding return as if there is only one free variable: Time. In reality, the actual rate-of-return is just as -- if not more -- important of a variable:

http://www.reistartup.com/2007/09/26/focus-not-diversification/
 
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MJ DeMarco

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Peter2

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Peter, I need help in here.
:) I think you are holding your own pretty good.

It's hard to change a persons thinking. Overall, I think the majority of all people, including most people on this forum have a hard time grasping the fast lane concept. Even a lot of the people that think they are in the fastlane, are really just working a J.O.B in their own business.

Compound interest is, and will always be slow lane. I'm not suggesting that you should never invest your money in anything that will bring you a slow lane compounded interest, but in my opinion, you should wait until you are absolutely financially set for life first.
 

JScott

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Compound interest is, and will always be slow lane. I'm not suggesting that you should never invest your money in anything that will bring you a slow lane compounded interest, but in my opinion, you should wait until you are absolutely financially set for life first.
Again, I think there is a semantic disconnect here...and I believe the specific problem is with the word "interest." I prefer to think about it as "compounded return."

In my example above (about Bill Gates), Bill is using compounded return to make his money. I don't think you'd call him "slowlane."

As another example, I imagine Russ and SteveO (among others on this forum) use 1031 Exchanges in real estate as a method of compounding their return. Again, nothing slowlane about that.

As someone else mentioned, compounded return is a mathematical tool, not "fastlane" or "slowlane" in-and-of itself.
 

Andrew

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Its about context! If you start with $10,000, you are not going to have a 7 figure income through compounding interest. Rather you need business investments that can give you a 10,000%+ return within two or three years, and you go from there.

Forget the part about it taking 40 years to building up a $2,000,000 nest egg on compound interest. The slow-lane here is really just the middle class lane. If any of you are in your twenties, like me, you are going to need that $2,000,000+ nest egg just to live a modest middle class retirement. There isn't a hint of excess about this. Average home, average car, and may be some traveling. Your friends that are living paycheck to paycheck will retire into poverty, if they can retire at all.
 

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SteveO

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Slow lane can be pursued after the fastlane as well. Once $10M is achieved, slowlane can feel pretty fast. :fastlane:
 

Russ H

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Woof.

Fastlane, slowlane . . .

In a nutshell (b/c I am, after all, a nut): :banana:

1. Examples of Fastlane thinking:

-using leverage to gain massive wealth
(leverage can be OPM, OPT, OPE, OPS, OPC (other people's money, time, experience, skills, connections, etc)

-Scaling a business or other venture so that it grows exponentially, not geometrically.

-Taking something (or nothing), and creating value:

You sell this to someone else for large amounts of money, either in
-small increments (publicly traded stock),
-medium increments (privately held shares to investors), or
-large increments (sale of entire property to another entity),

Any of these events net the creator hundreds of thousands- or better yet, millions of dollars.

*********

2. Examples of Slowlane thinking:

-If I work hard (in my J.O.B. or my self-owned business) for 20-40 years, I can get ahead

-If I sock away $2K when I'm 20, and put away another $2K every year after that, for 6 years (until I'm 26), using just the power of compound interest (@12%/yr), I don't have to do anything else for retirement-- by the time I'm 65, I'll be a millionaire.

-If I do anything for 20-40 years, setting aside $X/year, I can retire rich.

**********

I know that there are some folks on these forums who have never been exposed to "fastlane" thinking-- because from the time they were born, all they've heard about is the slow lane to wealth-- from parents, teachers, friends, and MSNBC (or any other media outlet).

I think that's the whole reason MJ wants to write this book-- to expose people to another way of thinking.

Fastlane thinking.

********

I think Diane Kennedy's post about compound interest hit a nerve, pure and simple.

As long as I've known her, Diane has been a leverage thinker. And she has phenomenal skill at taking complex topics and making them simple (can anyone think of anything more complicated than tax law!?).

To me, Diane's example of compound interest was just trying to show, simply, the incredible power it has over time. She then went on to show that, when you understand the concept, it becomes even MORE powerful if you use higher rates of return (e.g., 50% growth each year, instead of 5%).

Hey, Albert Einstein called compound interest the 8th wonder of the world. Even he was impressed by it.

It's probably important to point out that Einstein thought in terms of time and energy-- a lot. The concept of time, and the amount of energy expended, were two critical elements of his theories.

Time and Energy are also critical elements in fastlane vs slowlane thinking-- The fastlane folks want to accelerate-- do things faster, get to the same places (like retirement), but get there years-- decades-- faster than others.

Fastlane thinkers often accomplish this by putting more energy into their ventures-- working themselves hard at first, but also by using leverage (i.e., other people's energy).

Slow lane thinkers put in only their own energy, and it takes them more time to achieve the same ends.

**********

I didn't think Diane was trying to endorse waiting 40 years for a measly 12 grand to grow into a million.

I think she was just trying to show the incredible power that compound interest has over time, or what can happen to your overall plan if you accelerate the return from 10% to 100%.

To explain the concept, she first talked about results over many years, and low energy output-- both essential elements of slowlane thinking.

And I think that tweaked a few folks.

The way I read it, Diane was passing on some cool tricks and math things, not advocating slow lane thinking.

How we use these cool math things is up to us.

Make sense?

-Russ H.

(with apologies in advance to Diane-- I am not trying to speak for you, only describing what I read in your posts!) :banana:
 

kimberland

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I use the rule of 72 to figure out sales growth rates needed to double a business.
I don't usually call it the rule of compound interest
but the rule of compounding.

Is collecting interest slow lane?
I don't think the credit card companies would think its slow lane.

Is collecting dividends slow lane?
I own a company and pay myself dividends
(more tax effective than paying the cash flow out in a salary).
I don't think business building is slow lane
(though it can often be for the start up years, a money sucker)

Its not the vehicle.
It is how you're using the vehicle.

So please no knee jerk reactions to words.
 

Russ H

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Kimber said:
Its not the vehicle.
It is how you're using the vehicle.
Yes!

And thanks, Kimber, for bringing us back to car-related terms! :)

-Russ H.
 
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MJ DeMarco

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This thread was not in reference to anything Diane posted - when I started it, I was actually thinking about some of the comments I read in the "plan" section. Hopefully Diane doesn't take it personally as everyone here values her professional contributions.

Is collecting interest slow lane?
I don't think the credit card companies would think its slow lane.
Not when you're collecting it on $2 Billion - that is when compound interest has a profound effect. On $100/mo savings, it doesn't until you hit 30 years.

Is collecting dividends slow lane?
I own a company and pay myself dividends
Exactly! YOU OWN A BUSINESS that leverages a higher return with tax benefits. In that paradigm, compound return/interest can have an impact. Compound interest/return should not be your plan, it should be your accelerant - like throwing gas on your business or RE investments. I can't say this enough.

That said, financial literacy (slowlane and fastlane) is very important - compound interest, compound return, leverage, ROI -- all of these concepts should be apart of any persons competency set.
 

Legacy Dad

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I also think you have to look at the purpose of your site MJ.

Is this site for learning or keeping out those who don't agree with our views?

At one point in everyones life we followed the slowlane plan because that is what is force fed by the mainstream.

However, labeling someones post "slowlane" before they understand what fastlane thinking is can limit participation.

For someone who has spent their entire life investing in bonds and CD's, aggressive mutual funds may be fastlane to them.

Everyone learns at their own pace and speed.

I understand that you are trying to moderate the forums and keep them from becoming like another site we all frequented, but there also has to be a learning curve for those trying to get off the slowlane.

As kimber has already said, it's not the vehicle but how it is used and the mentality and plan of the user.

Lance
 

JesseO

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I don't see any confusion. Everyone learns at their own pace, but this forum is designed and NAMED after being in the fastlane. If you want to embrace slow lane ideas, there are many other forums that can accommodate such topics. There is an agreement as to what is fastlane and what isn't, and I think most (if not all) of the posters here understand that mentality. With that being said, Lance and Randall have valid points, but I must agree that this place is for fastlane thoughts. Also, I think anyone who is working the "9-5 job" can quickly understand the concepts here. If they want to learn, then they have come to the right place. If they don't want to learn, then that's fine as well.
 

Legacy Dad

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Definition of Fastlane: http://www.thefastlanetomillions.com/showthread.php?t=449

PhxMJ
Being out of the rat race gives me the freedom to pursue these goals -- however the goal IS NOT THE DREAM. The real dream is the pursuit -- and its exclusive of success or failure. Let me repeat that ... the REAL DREAM IS THE PURSUIT, THE JOURNEY -- the end result of this pursuit is inconsequential and irrelevant; the act of pursuit, the journey, is the dream itself.
Based on MJ's quote, the fastlane is a context of thinking and constant striving to improve and better ourselves.

It's the mentality that we pursue wealth with, not the vehicles we use.

Furthermore, based on MJ's definition, there is no time frame to reach the fastlane as the fastlane is the pursuit not the ends. However, getting into the fastlane quicker will produce the pursuit and thus ultimately the ends.

That sounds way too Freudian?

Lance
 

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