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The Little Book: That Still Beats the Market by Joel Greenblatt

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Chapter 13. Chapter Thirteen

WHAT WOULD YOU DO IF YOU HAD A LOT OF MONEY? Of course, I mean what would you do after taking care of your family and those close to you, after providing for retirement and the future of your loved ones, and after putting some aside to buy a few luxuries along the way? What would you do?

Actually, you may well have to answer that question someday. But don't worry. I'm not going to bore you with a pile of statistics. I'm not going to tell you about all the money you could make by using the magic formula. I'm not even going to discuss the whole idea of compound interest. That's the one where you invest a relatively small amount of money, earn a reasonable rate of return over time, continually reinvest all the earnings from those in vestments, and end up with a large amount of money. I'm not going to talk about that.

It's really too bad, though. With the new rules for contributing larger amounts of money to tax-advantaged retirement accounts, it would have been a good thing to discuss. As it turns out, starting now and making the maximum allowable contribution to an IRA[30] for just the next few years, you could turn a relatively small amount of money into a much larger amount. Obviously, with the type of returns achieved by the magic formula in the past, this really could have meant a lot of money for you. But, unfortunately, we're not going to discuss it.

It's truly a shame. By contributing just $28,000 in total over six years (the maximum of $4,000 per ...

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