The BIGG Successs Show
From Refund to Riches
How to turn a couple of thousand into a tidy sum! Read the show summary at biggsuccess.com.
Welcome to the Big Success Show! Today, we'll discuss how to go from refund to riches. The Big Success Show, with George and Mary Lynn. Here in the United States, Tax Day is tomorrow, and a lot of people are scrambling. Yes, the pressure's on. But a lot of people also will be getting a refund soon, and so today we thought we'd discuss how to turn that refund into riches. And also, comedian Jake Novak will join us later in the show, with his fun take on accountants. And today's show is really about found money, not just refunds. Exactly. Money that you weren't expecting, whether it comes through a bonus, inheritance, pay raise, or maybe even win the lottery. Yeah, and Mary Lynn, for the last year the date is available, which is 2006 tax returns, paid back in 2007. The average individual refund was $2,287, according to the IRS. That would be a nice down payment on a plasma TV. Yeah, he'd like that, wouldn't you, Mary Lynn? I would. The other thing is, though, you're hitting on something, and that is what a lot of people do with their refunds. They buy something that won't be worth much, if anything, in a few years. Ah, so what are you saying, George? Be practical, save it, invest it, that's so boring. Yeah, but the thing is, boring can be exciting when it comes to the compounding value of money. Oh, you can look at your face, you're so into it. All right, explain. Okay, here's an example. Let's just say you're 25 years old, and you get this $2,300 refund every year until you retire at 65. Okay. Further assume you can earn 8% on that money, which is probably a little bit conservative, but it depends on what you invest in. When you retire, that $2,300 a year invested will turn into a nest egg of over $643,000. Wow. Now, is that boring, Mary Lynn? No, it's not. You definitely have my attention. Okay, but here's the thing. Unfortunately, I'm no longer 25. And you admitted that live all over the Internet? No. I know you're 29, aren't you? Yeah, yeah. Yeah, sure. Well, the thing is, Mary Lynn, you're making a good point because age certainly does make a difference. Take what we said before, only now you're 35 instead of 25, that nest egg is less than half just by waiting 10 years. Wow, but still, we're talking about $300,000 here from simply investing a couple thousand each year. So what I got to say is this plasma TV is looking less and less attractive. Alright, I'm so glad to hear that. I'm sure you wouldn't have a DVD player if it weren't for me. The VCR player is just fine. Whatever, Mary Lynn. Geez. The other thing is, it can be better in two ways. The first one is this, quit loaning money to the government at 0% interest because, you know, that's exactly what you're doing when you get a refund. So, you've got to redo your W4 so that you end up only withholding what you really expect to owe, right? Absolutely, Mary Lynn. Now, let's assume you do that. Okay, this year, you invest the refund you get, then you're going to adjust it so you don't get that refund. It gets dispersed in every check. If you're that 25 year old instead of 643,000, with the same assumptions we made earlier, it will be $723,000, $80,000 more. Wow, that is very eye-opening. Who'd have thought that a refund was costing you money? It's very costly, isn't it, when you really look at it. Now, here's the second way that it can be even better. We've assumed an 8% return. If you have any debt that's costing you more than 8%, pay that off first with this found money and your returns will be even higher. As long as you have the discipline to invest rather than buy that plasma TV that's calling your name. Coming up, Jake's take with the top five signs that you hired the wrong accountant. Today, we're talking about how to turn a refund or any found money for that matter into riches, and the key is the discipline to invest. And we have funny money, man. Jake Novak with us today. How are you, Jake? Did you just add me as a counter? Something like that, right? The things you can do with Photoshop today. So you're going to give us your take and share the top five signs that you hired the wrong accountant. So what's number five? He insists on filling out your return using only Roman numerals. Very tedious. Number four. He offers to help you boost your deductions by renting you his wife and kids. Apparently, that's not very uncommon in some countries. Number three. Since most of your consultation looking nervous and asking if you're wearing a wire, that's never good. Yes. I think I hired that accountant one year. You got the pad down, I remember. All right. Number two. He does all of his calculations on an etch a sketch, which, you know, you need to save your record, so that's not a good thing. That's the best way to do things. I don't shake it, right? No, no, no. And finally, the number one sign that you know you hired the wrong accountant. His client list includes Leona Helmsley, John Gotti, and the Unabomber. No bomber. Al Capone didn't hit that list at some point, did he? Yeah, just slightly before his time. Yes. Another three. Thank you so much. You're welcome. We love having the jakes take, man. It's awesome. Oh, it's a pleasure. Have a great week. All right, you too. You can get a written summary of our show on our blog today at BigSuccess.com, and let's get our big quote for the day, George. Our big quote today comes from our person. He said quote. Quote. I just did. What's wrong with that? Nope. Our big quote today comes from a person named Proverb, and Proverb said, "Money grows on the tree of patience." So, do you want to watch your new plasma TV, or do you want to watch your money grow? The choice is yours. Next time, we'll talk about why being imperfect is perfect. And until then, here's to your big success. 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