Invest as Though Your Future Depended on It
When I talk to people about their financial future I always advise them to invest as though their future depended on it. After all, your future level of comfort down the line will depend in large measure on the savings and investment choices you make today. A comfortable retirement, one in which you are able to live out your dreams, will not just happen. It is important to plan for your retirement while you are still young, and let the power of compounding build a substantial nest egg over your working years.
The most important part of planning for a comfortable future is to get started as quickly as possible. I always tell people that it is never too early to start planning for the future. From the first paycheck on, it is a good idea to put aside a percentage, no matter how small, and earmark it for savings and investments. Obviously this is easier said than done, and most people do not go so far as to set aside a part of their paper route money for the future.
The power of time in investing for the future cannot be overstated, however, and the worker who begins saving at age 20 will have a far larger nest egg accumulated than the worker who waits until age 30, even if their earnings and investment returns are the same.
The basis of successful investment is discipline, and the best way to put that discipline to work is to put the money away before you ever see it. Perhaps the best vehicle for this automatic investment is the employee directed retirement fund offered by your employer. Most large and many small and midsize employers, offer either a 401(k) or 403(b) plan, and many will match part of their employees’ contributions as well. If you are not investing in a plan with an employer match, you are quite literally turning down free money.
Another great thing about 401(k) and 403(b) plans is that the money comes straight out of your paycheck, just like your taxes, benefits and other deductions. This kind of investing tends to be much more painless and easier to do on a consistent basis.
It is possible as well to automate other forms of investing. Many employers offer the option to have part of the paycheck directly deposited into a savings account or investment fund. This kind of automation can help build the fiscal discipline it will take to build a successful financial future.
No matter which option or combination of options you choose, however, it is important to get started as quickly as possible. Saving a percentage of your earnings every pay period, and increasing that percentage as your income rises over time, will help you create the nest egg you will need to enjoy a comfortable and secure financial future.
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