A Year is a Year
A Year is a Year
When it comes to investing time is either your friend or your enemy. It's up to you to decide.
I think one (albeit one of several) major hurdles to getting started on Retirement Investing is that retirement seems so far away. That you can easily procrastinate.
At issue, however, is time... T.I.M.E. time.
Today
Is
More
Effective
The thing about starting "today" is that because so many other people "procrastinate," you suddenly become Special. And Special means Exceptional and Exceptional means Awesome and that is exactly what type of life you will have if you don't procrastinate Investing.
MATH TIME!
Currently the Social Security retirement age for everyone born after 1960 is 67 years old. So, your working-life is from, say, 27 (real job) to 67, or 40 years.
Yes, 40 years is a long time. I mean a REALLY LONG TIME. But that is exactly the point! Forty years is a lot of time for your investments to build and for your money to earn you more money... while you SLEEP!
Using the Rule of 72 and the three year average of the S&P, in a moderate risk Mutual Fund at 9%, your money will double every eight (8) years (72/9=8). That is five "doubling's" during your working-life (40/8=5).
Now, if you're investing $458 a month ($5,500 annual cap on Roth IRA) at 9% that is $ 2,144,045 (over 2 million dollars). However, if you delay just 5 years your retirement amount will be $ 1,347,337 . Just over one million dollars.
What is the cost of waiting five years to get started on your retirement?
ANSWER: $796,708 dollars... basically three-quarters of a million dollars (37% of your money - gone).
http://www.helpfulcalculators.com/compound-interest-calculator
You see, time is your friend, if you start early. However, if you procrastinate, even just a few years, time can quickly turn against you.
REMEMBER:
You can't Invest until you have first learned to Save, and you can't Save until you have first learned to Budget.
Questions:
1. What things must you "master" before you can Invest?
2. How does the acronym T.I.M.E. affect your retirement?
3. Using the Rule of 72 and the five year average of the S&P (15%) how often will your money double, AND how many times will it double in 40 years?
Resources:
PowerPoint: ONLINE BROKERAGE COMPARISON