The One Conversation Which Helped Me Build My Net Worth

Good morning and Happy Friday!

Welcome to another edition of The Matt Viera Newsletter.

Thank you for your continued support.

When I started working with my current employer, I was completely unaware of all the benefits available to me as a new employee.

There wasn't any "new employee onboarding" orientation.

As I began, I shared a workspace with a veteran employee, Malcolm.

Malcolm was quiet and kept to himself.

One day we had a conversation that unexpectedly changed my financial life.

I don't remember how it started or what the conversation was about, but during the conversation, he casually asked me, "Did you start investing in TDA [the initials for our employer-sponsored tax-deferred annuity]?"

I replied, "what's "TDA"?"

Malcolm, this quiet, soft-spoken, reserved person, became the most animated person I ever saw.

He said something along the lines of, "Matt, you have to invest your money in TDA today, right now! You don't understand how important this is. TDA earns a 7% interest which is unheard of! It'll take you minutes to set up an account."

I went home that evening, logged on to the website, and set up an account. I invested 2% of my pre-tax income, from each paycheck, into my new TDA account.

From time to time, over the years, as my income increased, I increased my pre-tax investment from 2% to 5% to 8%, to 10%, to 12%, and so on. I never kept track of the balance and rarely thought of the account until last spring, when I calculated my net worth for the first time.

The only reason I calculated my net worth was that it was required when I refinanced a private student loan from a variable interest rate to a lower, fixed interest rate.

Anyway, I logged into my TDA account and was astonished that the balance was close to 6-figures! This one account, which I automated pre-tax income into, became the bulk of my net worth.

This one conversation from 11+ years ago helped me build my net worth to what it is today.

Lessons learned:

• Investigate ruthlessly any and all job benefits available to you.

• Ask questions or find a mentor to explain the benefits to you.

• Automate savings/investments.

Why is building your net worth important?

Increasing your net worth is one of the smartest investments of time and money you can make in yourself.

Your net worth is simply the value of your assets (what you own: the value of your house, car, finance accounts, etc.) measured against your liabilities (what you owe: your mortgage, auto loan, credit card debt, student loans, etc.).

Decrease the latter to increase the former.

Why should you increase your net worth?

Here are 4 reasons:

1) Improved Quality of Life

Building your net worth can improve your quality of life in many ways.

You can afford a better home (stop renting), travel more, or take up new hobbies.

The improved quality of life, which comes with the financial stability of an increased net worth, allows you to focus on the things that matter most to you.

2) Long-Term Wealth Building

Improving your net worth is a critical component of building long-term wealth.

The higher your net worth, the more you can invest.

Which leads to the benefit of investment growth from the power of compound interest.

Over time, a higher net worth can lead to what we're all striving for, financial independence.

3) Increased Financial Security

A positive net worth means you have a safety net in case of emergencies (especially if you have 3-6 months of essential expenses saved in an emergency fund).

You're less likely to rely on credit and fall into debt if your car breaks down, you have a medical emergency, you need a down payment, or you have a sudden job loss.

This leads to less financial stress.

4) More Options and Opportunities

A higher net worth can provide access to more investment opportunities.

You can take risks or pursue new ventures that were previously out of reach, e.g., invest in that first rental property you've been thinking about.

With more financial resources, you can make choices that align with your financial goals.

Start building your net worth today.

Calculate your net worth and develop a plan to increase it.

You can easily increase your net worth by paying down debt.

I hope you found this helpful. Have a great weekend!

Interesting reads:

You can now live on a cruise ship for $30,000 per year

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