What Do I Mean by Margin Anyway?

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7 min
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As a third-generation financial advisor, Tom Stadum carries on the tradition of his grandfather and father by delivering comprehensive financial plans, prudent investment strategies, and timely service
April 29, 2023

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Good Reads


“Apple was not that hard to understand. I mean, how dumb was I.”Legendary investor Peter Lynch on missing Apple.

A Suggestion

The Margin

We spoke last weekend about automation, and why it is one of the most important components to master while working to build and maintain your asset base. When you shrink the time between income and investing, you add years of investment over the course of your 40 year career. Think about that for a moment, by simply adding the element of automation, you can exponentially increase your odds of building an above-average financial outcome. But this week we’re going to take a look at life’s margins and why life is always won at the margin.

What do I mean by margin anyway? Margin is what’s left over after all your time is spent, your bills are paid, and energy is spent. What is crazy when you go down this rabbit hole is that much of our everything in life is already accounted for before we leave the house after college. 1/3 of our life will be spent sleeping. 1/3 of our money will be spent on taxes. Another 1/3 of that money will be spent on housing. 1/3 of our time is spent working. The average American spends 40 minutes a day commuting. You can see where I am going with this, we end up having little resources over time to truly make an impact on our lives, our family, our communities and colleagues. It’s humbling when you think about it but I hope you can see how automation forces better results and why the margins of life are so important. Automation ensures you don’t lose where it counts the most, at the margin.

Here's a simple example of why this, doing the small things well, matters. Susan and Sarah are both 35 and earn $150,000 a year.  They are exactly the same, except Susan saves 7% of her income while, Sarah saves 5%. Given a long term average return of 7%, 20 years, and a $50,000 starting point, Susan ends with $637,578, while Sarah ends with $510,694. Susan saved just $250 more per month, and ended up with over $150,000 more. That, my friends, is why the margin matters. Winning the small battles leads to winning the war. Here are 3 ways you can win at the margins this week.

  1. Automatic Draw into your brokerage account. Do not hesitate to set this up!
  2. 1% increase in your 401k
  3. $100 extra per month on any outstanding debt.

You don’t have to do all three but even doing one of these small changes can yield large outcomes later in your life. When you focus on automating your financial life, you win at the margins, when you win at the margins, you will start stacking wins. Stay nimble friends.

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