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“If you can convince people to pay $40 for $4 boxes of cereal, maybe, just maybe, you can convince strangers to live with each other,” - Paul Graham on Airbnb’s unlikely success
Everyone is losing their minds about AI. Y Combinator’s current class is filled with AI start ups. Morgan Stanley just put ChatGPT into their enormous database to learn, mine and recommend strategies to their team members. There is AI for everything.
AI has changed the world already and it will unlock many things for us as people, workers, and investors.
But while the world wonders about AI, everyone, I believe, should be focused on automation with their asset base and income.
Automating your financial life is the easy, fastest way to ensure success. How? When you decrease the time between earning money (job income, dividend income, etc) and investing, you exponentially increase your net worth in the years to come. it’s just math. Many people have automated their finances to some degree. Your employer does this for you (they pay you every two weeks), the government taxes money from you every two weeks too, or quarterly if you are retired or self employed. Your utility and internet bill are automated. Your 401k is. Much is for many people but there hasn’t been enough done to yield above average results. And if someone is above average and easily accumulates cash, if there isn’t an efficient mechanism to invest, people end up sitting in cash.
Here’s an example to reinforce this point - You save $1000 per month into a savings account, and have done so for 3 years, you are sitting on $36k in cash. Over this time, the market has averaged 6% per year returns. You’d have $2,266 more had you invested. Not that much honestly. Let’s go further. You leave the strategy as is and 5 more years go by, the spread grows to $18,814. The longer you go, the exponentially bigger the spread becomes.
Moral of this? Automate, ruthlessly. Don’t even give yourself a chance to wait and spend it.
I love AI, it’s amazing, but what is more amazing is compound interest and what that does to money over the long term.
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