It may seem silly to think about retirement when you’re in your 20s but here are 4 reasons why retirement is for the young.
Compound Interest This is the most magical thing in the world. Compound interest means you earn interest on your interest. For example, if you invest $100 and earn 2% interest, you now have $102, you then earn 2% on $102 instead of $100. In this way, your money grows faster than if you earned 4% interest on $100. It also means you’re earning money on free money.
Time is of the essence As bomb as compound interest is, it’s key to start early in order to get the most out of your money. Additionally, starting early means the lowest lift. On average we save for about 30 years length the earlier you start the more money you’ll earn with the least about of lift.
Young people take risks! There is inherent risk when investing in the stock market but over time the stock market has always balanced out, typically producing a 7% return. Starting young means you have more time to let your money grow as well as weather the ups and downs of the market.
This chart Do you want to save $361 now or $14,261 later? I absolutely hate it when I see an awesome pair of shoes on sale but when I’m ready to purchase them the price has gone up or back to its original price. I think of retirement savings in the same way, I can start now and buy my retirement at a discount rate or pay full price later. Chances are, full price will make it a completely unaffordable reality.
Retirement may be something you do later in life but retirement planning needs to happen now! Ready to begin retirement planning? #letstalk
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