Lately, I’ve been a master procrastinator. Life has been hectic for sure, but I have had a lot of time to get things done… and ended up postponing them. Then I look back to the past few months, and I feel bad because I have done nothing.
Mostly, that has been true in the areas of fitness, and automation. One of my goals is to leave my businesses (the blogs and my little house in Guatemala) as hands off as possible, so I can go travel, or simply do nothing, and not worry about them. It requires some work upfront, such as training my staff so they can perform the tasks that currently take me so much time.
But because each task takes a few minutes, and I would have to train my staff for hours, right now I tend to do it all myself, and remain frustrated.
The same goes with fitness, I sprained my ankle pretty bad a month ago and instead of doing other types of exercise that don’t require ankle strength, I have just been waiting, and now I don’t like the extra pounds around my waist. Making them go away will be much harder than working a little bit every day so they don’t get there in the first place. But it’s too late.
Retirement is the same. It’s not something you want to delay and then look back when you’re 50 and find out you have saved $500.
And just like my terrible first world problems, it just requires a tiny little effort on your side right now, to set you up for a good financial future.
How to get started with investing
Investing is a big word, but when you look into it a little bit, it isn’t that scary. If you know nothing about the markets, and where to start, I’d recommend you simply stick to index funds. They track a wide variety of stocks, limiting your exposure to just one stock.
The S&P500 for example is indexing the 500 biggest US companies, so instead of buying one share of one company, you are instantly invested in oil and gas, food, transportation and much more.
The best online brokerage accounts are the ones who offer low fees, and low initial amounts to get started. Why? Because fees will cripple your nest egg, even if they are “only” $5 here and there, over the long term, it amounts to thousands of dollars.
For example, Motif Investing has no minimum amount to start investing. Instead of putting all your savings there, and regretting not having any liquidity (or worse, charging your credit card!) when the next emergency arise, I would suggest you set up a monthly automatic transfer, like $50 or $100, and see how it goes.
If it feels too tight, you can adjust down the next month. If it doesn’t hurt, try sending a little more. This is money earmarked for retirement. Yes, you can use it ten years from now to pool together a down payment for a house, but you should consider it gone for all short term purposes, like a holiday or a car replacement.
With an index such as the S&P500, you can expect returns OVER THE LONG TERM of 8-9%, based on the past 30 years. This is not a guarantee of future returns, and you have to stay calm when the markets do down, which they will at some point.
But if you are young, time is on your side and the markets will recover. Saving $100 per month at 8% for 35 years will put $232,392 in your nest egg for retirement. Not too bad considering we’re just talking about $3 a day.
If you start at 50, with only 15 more years to invest, investing $500 a month will not only hurt much more, you will only have $174,575 for retirement.
Don’t procrastinate, or it will cost you dearly. Get started now.
True! I know how that kind of regret feels! Though I’m still on my early 30’s, I thought that I should have done better in my previous years. I feel like I’ve wasted so much time! Now I’m cramming up planning my retirement to have a better future. Started it and hopefully, everything will pay off later. Good luck to us! 🙂
The power of compounding is incredible so the earlier you get started the better. You don’t have to be a “perfect” investor before you start investing because there really is no such thing. There is always something more to learn so like this post says, just get started!
True! It is never too early to start retirement planning. Soon as you start earning, you can plan for retirement and start investing! Investing should never discourage you to earn some more or different. Treat it as an adventure and look forward to new learnings. It grows your wisdom as well as your finances.
I am a bit afraid of investing as I still don’t know hot it works. That being said, I think I am gonna look into index funds to see whether it’s a good start for beginners. Thanks for the advice, Pauline.
Maxene,
Index funds are a great place to start. In fact Warren Buffett said that he recommends when he’s gone that his family put the majority of the money into an S&p 500 index fund (he recommended Vanguard).
Just remember to get it into a tax sheltered account for retirement (401k or Roth IRA). Vanguard is a great company to use, they have mutual funds if you are investing small amounts each month, or get an online brokerage and check out their ETF’s if you’re making larger, infrequent purchases.
Retirements can be harsh, if not planned. I have already planned mine. I started with my retirement scheme quite early, when I at just 31. I think it is going to pay me well at 60 something. Motif Investing is one idea that I went along for long term investments and positive gains later.
I think that there two major benefits of starting young: one is compound interest. The other one is being able to go through ups and downs. That is really what differentiates experienced investors from non-experienced ones.
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