Alex Hormozi

So this is kind of the new way I think about your goal.

Let's say that you had the goal to have a million dollars.

Obviously, add or remove zeros as it suits you, right?

Some of you might be 10 or 100 or a billion, whatever you want.

Let your heart go wild.

But let's say that you wanted a million dollars when you retire so you could live passively on $50,000 a year from investing it in bonds or something that's relatively low risk.

Well, you have to realize that in 50 years, that million dollars will only buy you $170,000 worth of stuff.

And that $50,000 of passive income, oh yeah, that's only going to get you about $8,000 worth of stuff.

tough to live on that per year.

So let's say that you were a little more ambitious and you said you wanted $4 million.

Well, just to be clear, that was my lifetime goal when I was in high school, because I figured if I could do that, I could live passively on like 160 to 200,000 a year, which is four to 5% of that, which means that I could live indefinitely.

I could keep the principle and just kind of live on that four or 5% interest.

And if that was your goal,

like it was for me, you might want to adjust it and take into account the inflationary reality.

So if you want that $4 million when you retire, you probably need $24 million.

If you wanted $200,000 in dividends that you could live passively on from interest, you probably need closer to like $1.2 million per year in distributions.

I know, that's a big difference.

Again, that's just because you're thinking in today's dollars, not future dollars.

Now, before you lose your mind and just throw in the towel and say that you'll never make it, I want to give you some good news.

Compounding is still a thing and it still matters.