Myth 1: A large amount of money is needed to invest.
It is true that you need money to invest especially if you are buying stocks. But you don’t need a large amount of money to start a business or to invest in stocks. Company retirement plans gives room for you to be able to invest immediately you start working with a minimum of 1% of your income. You can start an IRA if you don’t have access to 401(k). The minimum you can invest in Vanguard 500 fund is normally $3,000, but it will be reduced to $1,000 if you open an IRA. Small investments, when done diligently and consistently will really multiply. If you invest $40 for one month or $480 in a month for 40 years, you would have realized about $19,000 (this is just an illustration). There are some things you have to consider before you invest for retirement Instead of thinking about the quantity of money you must have before you can invest.
What do you see when you think about your retirement?
Will you like to continue with your current lifestyle after retirement? Does your perfect retirement life resemble the one you are living now? This is an open end question. Your planned lifestyle after retirement will determine this.
What’s your income presently?
What you are currently earning is a yardstick for measuring your savings need. The more money you make now, the more investment you will need at retirement. How much can you get from Social Security? Will you get any distinct pension benefits at retirement? These monthly payments can reduce drastically from what you may have to save.
How soon do you wish to retire?
Your age at retirement is a determining factor in the amount of money you can invest. If you are younger when you retire it means you still a longer life to live (all things being equal) and that means you have to save more money that will cover those long years and it is the other way round if you retire when you are older.
How will you invest?
If you are committed to your investment plan, it is logical that you should expect a higher return rate on your investments, that is, you’ll have to save less unlike someone who insists on keeping all his investments in the bank’s account.
How old are you now and how much have you saved?
Are you in your early 30s, 40s or 50s? Then you may be fortunate start saving aggressively and the more you save now that you are younger the less you will need to live your ideal life at retirement as compared to someone who is much older now and also need to save as high as what you save.
The bottom line is that you don’t have to have a huge amount of money before starting to invest towards retirement. Start now, make plans, take actions and watch your health and you will be able to enjoy a fulfilled life at retirement.
Related Posts :