In order to achieve your long-term goals and maintain your lifestyle in retirement, you’ll need to build financial wealth. That’s kind of a no-brainer, isn’t it?
You certainly don’t want to depend on Social Security as your primary source of money in retirement. Unfortunately, too many people do, and they lament how little they have to live on in their sunset years. Many outlive their retirement assets and are unable to find a way out. Last time I checked, there weren’t too many job opportunities for 75-year olds!
To avoid this situation, you’ll need to develop an investment program that will provide sufficient assets for your retirement. Much of this will come from your employers’ retirement plans (e.g. 401K) while the balance is from your own investing during your career years.
In the end, your long-term wealth will be a function of the following:
1. How much you invest
2. The rate of return on your investments
3. The time period over which you are investing
In each case, the larger the amount, the greater the assets you’ll build.
Your chances of accumulating significant wealth will be greater if you invest as much as you can (rather than overspending), as early in your career as you can. This will allow your returns to compound over a longer period of time.
How early in your life you begin investing has a more significant impact on your wealth than you can possibly imagine. This is because of the power of compounding your returns over many years. For example, if Kyle invests $2,000 per year at a 7% return from age 18 to 27 and lets it grow at that rate until he is 65 years old, he will have a much larger nest egg than Ashley who waits until 31 to start investing and puts $2,000 in each year until age 65! This is true even though Kyle only invested $20,000 versus Ashley’s $70,000!
Beginning your investment program as soon as you start your career should be a top priority. Save and invest early, regularly, and as much as you can in a diversified, long-term investment program. It will provide you with the best chances of building significant wealth for your retirement, achieving financial freedom, and giving generously to charitable causes.
How have you made saving and investment a regular part of your retirement strategy?
Share your ideas (or even your questions) with our online community by commenting below…