This is a guest post by Ron Speaker. A note from Greg:
“This week we have a special guest post. The first of many, I hope.
I was first introduced to Ron Speaker by my good friend and client Michael Umansky, a tremendous entrepreneur, husband, father, athlete, and midlife male. So when Michael tells me someone’s the real deal, I listen.
Ron and I connected, and he was gracious enough to invite me to Aspen; he and his family live nearby to speak at an event he was hosting. We had an in-depth fireside chat around all 6F’s with a group of men, followed by a delicious dinner where we all shared stories, experiences and insights.
The following day, I met Ron at his home, where he and his wife, a competitive CrossFit athlete and coach, built a “Box” (CrossFit slang for gym) in a barn for a workout. We followed it up with “Nature’s cold plunge”, a dunk in the freezing Colorado River, which backs up to his home. Throughout, we talked about family and finances.
Ron has tremendous experience, and proven success. He’s committed to educating, and helping. His finance camp is the perfect of example of this, as he’s mentoring, inspiring and guiding kids towards financial literacy and independence. Developing these habits, behaviors and mindsets early is imperative and too often overlooked. It’s something that I missed out on early on and have been playing catch up ball ever since.
When Ron asked if he could contribute to MLM, it was an easy yes. I trust him, respect him and genuinely like him and i’m proud to call him a friend and mentor.
Please enjoy this piece from Ron Speaker.”
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The Ultimate Guide to Your Children’s Financial Future – How to 100x Their Money
Recently, my wife was scrolling through some photos on my phone from a birthday party we attended and came across an Instagram post I had saved titled, “Ryan Reynolds is playing chess while the rest of us are playing checkers.” Since it involved Ryan Reynolds, she had to watch it.
The post, made by a fast-talking financial educator named Mrs. Dow Jones, explains how Ryan and his wife, Blake Lively, are employing their children and friends (like Taylor Swift) in their businesses, allowing their children to earn actual income. This earned income enables them to fund Custodial Roth IRA accounts for their kids, contributing up to $7,000 annually.
Contributing $7,000 annually into a tax-advantaged account from a very young age can multiply their money significantly. The numbers are staggering, and the future is bright for your children’s financial well-being.
First, let’s break down the math. Many investors love to talk about percentage gains. While it’s impressive to say, “I made a 20% or 50% gain on a stock this year,” things get confusing when we talk about bigger gains like 350% or 4,500%. Instead, I prefer to think about multiplying my money. For example, a 10x return equals 1,000% (10x 100%) in typical financial jargon.
We’ve all heard about the “8th wonder of the world,” compound interest, and many assume we understand its power. But unless you’ve done the math, it’s hard to grasp the true impact of just a few extra years of compounding. Let’s unlock this potential for your children’s financial future.
To start, let’s assume an average annual return of 9%, which is roughly the rate at which the S&P 500 has increased over the past 20 to 50 years. A $1,000 one-time contribution today would be worth $74,357 in 50 years, which is 74 times your money.
A single $7,000 contribution would grow to $520,502 in 50 years. That alone should be exciting, but let’s go further. If you contribute $7,000 annually for just ten years and then let it grow for another 40 years, your children could have $3,860,908 in retirement. You could essentially set them up for a comfortable retirement by contributing just $70,000.
Now, what about that 100x return I mentioned? We have twin boys who are 11, and they asked what 54 years of compounding would do compared to 50 years. When we did the math together, the extra four years of compounding resulted in an astonishing 30x increase. Their initial $1,000 would grow to $104,961. If we made a one-time $7,000 contribution, they would have $734,731 by the time they retire at 65. Mind-blowing, right?
Of course, annual $7,000 contributions might be a stretch for most children to earn and parents to contribute. So let’s be realistic. A more modest goal of just $1,000 per year for the next 10 years would grow to $17,560 in year 10. But the real magic happens if they let it grow for the next 40 years, transforming into $551,549. Double that to $2,000 per year, and they become millionaires.
In the past week, inspired by my wife’s desire to keep up with the Reynolds family, we’ve opened two Roth IRA accounts, created an LLC for my son’s new business (Bubbles and the Boss LLC), and started an Excel spreadsheet to track their earned income. They’ve already earned $100 each in the past few weeks, so we’ve funded the accounts and purchased a low-cost S&P 500 index fund. With some creativity and help from friends (Ryan, are you listening?), we might find a legal way to get close to the $7,000 limit this year.
As a former financial advisor, I encourage everyone to follow IRS rules and keep solid records of their children’s income and contributions. The benefits of these accounts are incredible.
They say yesterday was the best day to start an investment program, and today is the second-best day. So don’t be a Deadpool—get in the game!
P.S. If you want to see just how powerful these numbers can be, try running them yourself with an online compound interest calculator.
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Ron Speaker is a Wall Street veteran with over 38 years of professional experience in the markets. He began his career as a summer intern in 1986 at Janus Capital Group during the company’s meteoric rise in the mutual fund industry working for two finance legends, Tom Bailey and Michael McGoldrick.
During his 21-year career at Janus, he had a front row seat to the major market moving events from the stock market crash of 1987, the credit and Latin American debt crisis of the early 1990’s, the Long-Term Capital bond market blow up, the 1997 Asian crisis, the Dot-Com bubble, the tragedy of 9/11, the Iraq war of 2003, the 2010 flash crash, and the 2008 great financial and housing crisis.
After leaving Janus Ron started his own investment firm, Equus Private Wealth, a boutique fixed income firm that focused on municipal bonds for high-net-worth investors. Equus became known as the authority on Colorado municipal bonds and a specialist at non-rated, higher yielding issues. He and his team developed financial models and boots on the ground research methods that were unique for municipal bond investors. During this period of his career, he successfully navigated the markets during the 2010-2012 housing recession, the 2020 Covid crisis and the 2022 rise in interest rates that delivered the worst bond market performance in over 40 years.
With his vast working experience and knowledge passed down from his mentors, Ron is now focusing on sharing his experience and wisdom through “The Finance Camp” for teens beginning in the summer of 2023.
