Automatic Wealth for Grads

** for "Employee" quadrant financial suggestions**

Automatic Wealth for Grads_by Michael Masterson

Content highlights
· Choose a great career, get your first job and rise to the top of your field
· Continuously increase your income on a fast-track basis, and get the biggest raises of your life
· Profit from the real estate market—even in today’s uncertain market
· Start or gain equity in a business that will provide an automatic future income stream
· Invest in the stock market, save money on taxes, make purchases that appreciate, reduce your credit costs, and achieve financial independence while you are still young enough to enjoy your money

Notes: Three questions to ask yourself: What shall I do with my life? Where? with Whom?
Points:

• "Automatic" wealth: means without conscious effort
• "Wealth": "Net Saving" for FUTURE use, not current use
• SAVE money: be cautious of your spending change when your income increases
• The power of compound interest: save early
• Always pay yourself first: the “Tax” effect
• Boost your income: don’t let your age stand in your way. Perform from ordinary to
  extraordinary and invaluable
• Wealth: function of $ you make, $ your invest, and for how long
  

What surprised me in this book is that the author spends pretty much time on job/career part, for example, how to get the job you like, how to progress on your job, get the promotion, how to modify your job to be critical to create value, etc.

Well, that definitely makes sense, especially for Grads. But interesting thing is its implications: your basic income (salary) and the power of compound interest.

Having worked in compensation area and being a certified compensation pro, I understand how the compensation systems have been structured. The base pay is truly crucial if you really want to boost your overall income. Because for almost all the short term/long term incentive and bonus, your base pay is always in the function to determine what much is exactly coming your pocket. Beside that, other compensation and benefit adjustments are based on your base pay level, such as general pay adjustment, merit and equity pay, and even for your 401K plan you would get more employer contribution with the same % level in your plan.

Because most of compensation components are tied to your base pay, the effect of $ increase in you base pay is actually creating maybe 5-10 times of value. Plus, if you are taking into account the compound interest effect, the earlier you are able to increase your pay level, the much more income you are actually generating along the way.

Getting wealth by boosting your salary, you would be able to catch all the implied benefits associated with the base pay increases. Also, by saving early, you would be able to take the advantage of the compound effect to create the wealth automatically no matter you are putting them in your retirement plans or other investing vehicles.

Getting real, most of us still live on the paychecks, and we need a job and the paycheck to support our lives. Investing is the sure thing has to do, but going to the basics, get a well-paid job would make it much easier and faster.