George Kamel - The Number of Millionaires Just Jumped (Here’s Why)

Episode Date: November 13, 2023

A recent market rebound launched thousands of people into millionaire status. Find out why this happened for some people…and not for others.   Links:  This episode is brought to you by BetterHelp. Give online therapy a try at https://www.betterhelp.com/george and get on your way to being your best self.  Learn more about the investment pros I personally trust: https://www.ramseysolutions.com/retirement/smartvestor   Preorder George Kamel’s new book, Breaking Free From Broke, and get more than $100 in FREE bonus items. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you're on the path to becoming a net worth millionaire, you could be closer than ever to reaching that goal. And no, it's not just because you found yourself watching this channel, which, according to anecdotal data for my mom, increases the odds of reaching millionaire status significantly. Thanks, Mom. It's because the market did its thing and swung back after taking a pretty good dip last year. Okay, maybe it was more of a dunk than a dip. And if you're watching your 401K, it probably felt more like a cannonball. But good news, things have turned around in 2023, and a recent survey shows that,

that retirement accounts like your 401ks and IRAs have seen balance increases for the third straight quarter. Don't call it a comeback. Well, maybe actually this time call it a comeback. I feel like that's what's happening here. This is the most shocking rebound since Crocs went from F to S tier. They are my Crocs. And if you're wondering, no, I did not participate in Croc-Tober. But you better believe I participated in one of my favorite months, August. So in today's episode, we're going to get into why this rebound launched thousands of people into millionaire status and why many more missed out.

But first, let's pay our respects to the algorithm by hitting that like and subscribe button and share this with your friends who are already decorating for Birkenstock-Tober. It's too early, people. Get a grip. All right, here's the story. In 2022, the stock market ended the year with its biggest annual drop since 2008. Ouch. According to Reuters, the S&P 500 dropped over 30% and stocks were going hard in the paint

in a troubling direction. Much like Nick Cannon, who had five kids in 2022 alone, bringing his grand total to 12 children. Noodle on that math for a minute. Five kids, one year. He didn't birth them. Someone had to. That's crazy. Once you lost Moriah, you know you lost it all. Needless to say, the stock market dips scared a lot of people, causing many to pull their money out. Well, let's back up. Why do dips like this happen? Well, sometimes even a seemingly tiny event can send stock prices skyrocketing,

or plummet. And in this case, I would say we had some pretty big events going on the last few years with, you know, the domino effect of the global pandemic and stuff. And when things dip, investors freak out, pull their money, and all of that can spiral the market into an even bigger mess. Plus, people who have a lot of money and riskier stocks, especially feel the heat. Then when a lot of people pull money out of investments or don't invest at all, this contributes to stocks going down in value, hence the said dip. On average, these bigger dips or market corrections happen about every other year. But smaller dips in value can happen even more often than that. And the way I look at it, these are just a reminder that stocks are not a one-way tram ride up the Alpine Mountain of wealth building.

The stock market is more like a roller coaster, and we're going to experience market volatility from time to time. It's just part of the ride. Just ask the people riding America's fastest roller coaster, King de Kahn, at Six Flags Great Adventure. The only people who get hurt are the people who get off the ride early. Can't wait till I'm tall enough to ride it. I can deny it no longer. I am small. And market corrections may last days, weeks, or even months.

But over time, the market will begin to trend back up and return to happier Bob Ross levels. We don't make mistakes. We have happy accidents. Just remember that corrections and intermittent resurgence of Froyo shops are a normal part of economic cycles. This episode is sponsored by BetterHelp. Hey guys, it's George.

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So back to this most recent correction. It's a tale of two investors. The people who stayed the course and kept their money invested just saw a big boost in their retirement accounts. In fact, Fidelity reported that the number of employees with balances over a million spiked 26% in the second quarter, amounting to 378,000 401k millionaires, not to mention 349,000 IRA millionaires,

and all the millionaires in the club be jumping jumping. As for everyone else, well, four in ten investors pulled money during the 2021-2020 stock market volatility, and they aren't faring quite as well. A recent survey shows that out of that group, 40% regret doing so. Fun fact, and maybe not surprising, the survey also found that men were more likely to take out their money than women.

And I assume the survey went on to find that men are more likely to grunt while weightlifting, refuse to ask for directions, and hoard unused cables just in case. Jeff, listen, man, you're not going to need the firewire 400 to USB cable anytime soon unless you plan on whipping out the old Sony handy cam. Okay, give up the ghost, my friend.

So why the regret? Well, because by pulling their money out, these investors rob themselves of the chance for their money to grow in the future. You see, when you take your money out of the market, you're basically locking in and guaranteeing that loss because compound interest is no longer able to work its magic. Plus, taking money out during a dip

is pretty much the worst time because you're selling your shares when they're the least valuable. That's like trying to sell your pre-lit Christmas cactus on December 26th, or really any day for that matter. Because what you don't get when you sell is that sweet, sweet rebound. When you look back over the last 40 years, the S&P 500 was up 31 of those 40 years, and 21 of those years had a return of greater than 12%.

And even including all the years it was up, all the years it was down, those 40 years, there was a 12% average annual return. But look even closer, and you'll see that in the same 40-year period, market dips and even bigger crashes happen, such as the stock market crash of 1987, the terrorist attacks of 9-11, the Great Recession of 2008, and of course the coronavirus crash of 2020. You see what I'm saying here?

If you pulled out your money when things were looking down, you would have missed out on that sweet 12% growth, which, fingers crossed, is also what my doctor promised I'll averaging growth over the next 40 years. He says I'm a late bloomer. Sure, Jan. Think about it this way. According to Fidelity, if an investor starting with 10 grand

had missed the five best investment days between January 1st, 1980 and March 31st, 2020, they would have missed out on roughly $265,000 in growth. And that number more than doubled to almost, almost $582,000 if they missed out on the best 30 days. I've made a huge mistake. So what's the best way to protect your wealth and ride out these market corrections to end up like the beloved millionaires in our story?

Here are four practical tips. Number one, stay invested. Remember, the stock market is like a roller coaster, so be mentally prepared for the ups and downs. It might be a wild ride. You might lose your hat. You might even upchuck a fleet of many corn dogs. But the odds are you'll end up safely where you want to be in the end.

But of course, if you try to jump off early, you're going to get hurt. So don't let panic or fear call the shots. Stay invested when the market declines and just wait like a good boy for it to go back up. And as long as you're invested in solid funds, treat it like a Facebook account. Forget about it until it's absolutely necessary for you to know if Mikey Taylor, the guy who had that accident on the bus in sixth grade, were covered to be a functioning adult. Then you spend a few moments poking around, but shortly you move on with your day. Number two, keep a balanced perspective.

I mean, if you just zoomed in and saw the market on one bad day, it would look terrible. And if you zoomed in and only saw the recovery, it would look amazing. But neither perspective gives you an accurate picture. It's the economy's butterfly. Delightfully magical from far away, but distinctly unsettling up close. Number three, don't try to time the market. Building wealth is a marathon, not a sprint. So swing trading or day trading during market corrections is a terrible idea.

It's like playing a high-stakes poker game, and it could leave you broke, disappointed and overly confident at your office casino night. Remember, it's not about timing the market, it's about time in the market. And lastly, number four, think about buying the dip. I mean, in all but one time in the past hundred years, every instance of market decline has been followed by an amazing recovery the following year. Think about it. The stock market almost always experiences significant gains after a period of decline.

So what does that mean for you when the market's down? It's a fire sale, baby. Oh my God! We're having a fire sale. If the market's down 20% think of it like a 20% off sale. You're getting some great bang for your buck here. And when the market inevitably rebounds, you're going to be glad you bought the dip. And here's a bonus tip.

Meet with an investment advisor. If you've got questions about market corrections, schedule a meeting with an investment advisor to talk through any tweaks you might want to make to your portfolio and squelch your fears about the economy. They can help talk you off the ledge. Plus, you might get a fake Yeti with their company logo on it. Investment advisors are all about the swag. Do we get free stuff? You don't have to make any drastic changes here, but you can use a market correction

as a chance to check in on your overall strategy. If you don't regularly meet with a pro, then this is a great opportunity to get one on your team. I'll link below to the only investing pros I trust. Bottom line is, if you're working the Ramsey Baby Steps to Build Wealth, all you need to do is take a deep breath and stay focused when the market starts getting lower than Lil John on the East Side Boys featuring the Ying Gang Twins. And whatever you do, never pull money out of your 401k or IRA before retirement age, with the rare exception that you're facing bankruptcy or foreclosure.

Don't do it, please. You're robbing your future and paying taxes and penalties on top of that. The key to wealth building is consistency. That's the thread that ties millionaires together. Consistency and, well, money. You see, no matter what's going on in the world, millionaires keep working hard and they keep putting money away. They don't get distracted. They don't put their hard-earned money into flashy investing trends they don't fully understand.

and they don't panic every time the stock market has a bad day. And one day, they look up and see that their nest egg has hit the seven-figure mark. Now that's what winning looks like. And there's no reason that can't be you someday. And if you want to learn more about building wealth, I've got a whole chapter on this in my new book, Breaking Free from Broke, and the chapter is called Wealthas Patience. I thought that was appropriate.

It's on pre-sell right now with tons of free bonuses to bribe you, and it would mean the world if you would check it out and grab a copy. I'll drop a link in the description below. Hope you enjoyed this episode. don't forget to hit those like and subscribe buttons and share this with a friend who you'd love to eat Froyo with on a roller coaster. As always, thanks for watching.

We'll see you next time.