How I Will Be Rich

The short answer to this question: As early as possible.

The slightly longer answer. (Well, actually it’s more like statistics.):
If you start investing about $19 per week at age 25 and earn an 8% annual return on that investment then decide to completely stop putting money into that account at age 34, you would have invested around $10,000 over that 10 year period. Without adding another cent to that account, by age 65, your funds would have grown to about $168,600. On the other hand, if you were to start investing at age 35 and put $1,000 in the account every single year until you turned 65, you would have invested $30,000 and you would be retiring with only about $125,000.

If you are reading this right now and you don’t have some sort of plan for retirement, start now. Invest in a tax sheltered account such as an IRA. Social Security is close to the point where the government will be paying out more than it’s taking in. You need to rely on your own retirement strategies and not what the government might provide in the future.

One way to look at retirement is that you are saving up to buy it. Think about it. When you want to go on a nice vacation, you save up to buy it or when you buy a home you need to save to buy that. The most expensive thing you will purchase in your lifetime is your retirement. You need to save up to buy that time, free of working. It’s getting harder and harder for people to have a comfortable retirement these days because people are living longer and the effects of inflation are lowering the value of our money. So think about retirement as putting away money every month to save to buy that freedom later on in life. Invest under a tax shelter in index funds and start as early as possible.

-M

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