While it’s definitely a dream to sit back and enjoy your retirement years with a pile of cash to spare, it remains a pipe dream for many, and even if you don’t consider an amount of money along the lines of, say, a million dollars, it’s hard to say it wouldn’t come in handy.
Thankfully, you won’t need to be earning upwards of 6 figures only to save up a couple of millions for when you retire, and this article will aim to guide you through the steps needed to turn your average earnings into a comfy nest egg over time.
Giving your money time to ferment and grow like a nice sourdough loaf is key, and allows you to turn consistent small retirement plan contributions into a hefty sum in your later years.
One projection shows that if you had started setting aside $400 each month into an IRA at the age of 25, by the time you turn 70, with an average annual return rate of 8%, you will have amassed $1.8 million.
However, delaying these plans by only 10 years will halve your return, setting you at roughly $830,000, which just doesn’t have the same ring as almost $2 million.
Diversify your investment portfolio by looking into bonds, stocks, AND real-estate
Playing it safe is a tried and tested strategy when it comes to investing, but it is also the least profitable one, and investing in stocks, volatile as they may be, is the only way to capitalize on the aforementioned 8% annual return rate.
Greater risk brings about greater rewards, and an investment portfolio chock filled with stocks is definitely one way to do it.
However, stocks aren’t guaranteed money, far from it actually, but with the market’s historical average sitting at a higher rate than that, you’re more than likely to at the very least make your money back in full.
That being said, putting all your eggs in one basket is never a great idea, which is why almost all trading experts advise diversifying your investment portfolio, keeping certain amounts of your assets in bonds as well, despite their low return rates.
Investing in real estate is another way to hedge against stock-market crashes, as their value will not follow suit immediately.
In the end, the most important detail is starting early, the rest will come to you on its own, with trial and error, as small mistakes can be valuable learning experiences for freshly baked investors