Source: Fortune
Summary
Financial expert David Bach reveals that 654,000 “401(k) millionaires” in the US have amassed fortunes by following the 70/30 rule: 70% of their retirement account in stocks and 30% in bonds. This strategy, combined with automation and consistent saving, has allowed them to build substantial wealth. Bach argues that this approach is more effective than high-risk strategies often marketed to young investors. He also emphasizes the importance of automation, citing that seven in 10 Americans live paycheck to paycheck due to lack of automatic savings.
Our Reading
The numbers tell one story.
David Bach’s 70/30 rule is a remarkably boring yet effective strategy for building wealth. The formula involves investing 70% in stocks for growth and 30% in bonds for stability. This approach contradicts high-risk strategies often marketed to young investors, who are instead drawn to riskier assets like crypto. Bach’s emphasis on automation and consistent saving is also notable, as it highlights the importance of discipline in building wealth. The contrast between the 70/30 rule and Gen Z’s preference for riskier assets is striking.
Author: Evan Null
