Financial journey to retirement is not a race. It's more like a slow and steady climb spanning the entire career. The younger you are when you start the long climb (investing), the better off you'll be when you reach the top (retirement.) Unlike climbing real mountains, climbing the retirement mountain is not that hard. It requires knowledge and discipline; the top is very attainable.
Time in the market vs. Timing the market will set you up for success.
Don't take my word for it. Look at the S&P 500 for the past 30 years. Note the 2,631% return over that time period. This is precisely why you can't time the market. Stay invested and keep investing even during down years.
What You Need To Know And Do:
Let's do some simple calculations. Let's say you're 30 years old and you start with zero retirement savings, but you contribute $1,000 each month and keep that up for the next 30 years. Given that your $1,000 is being investing in an ETF like VTI (I'm not recommending VTI, using it as an example only), and your average return over the 30 years is 6%, which is on the conservative side. After 30 years, at 6% return, you will probably have close to a million dollars in retirement savings. Remember, boring is the name of the game. The more boring the investment the better it is for your long-term portfolio. Pick investments based on their low expense ratio and ones that offer dividends. Don't forget to reinvest dividends for the powerful compound growth factor.
The whole point of this exercise is to visually display two things:
- Long-term investment pays off.
- Investing is the only way to build long-term wealth.
If investing is a foreign concept for you, learn the basics. You have a vested interest in your own success. If you need help, consult a fiduciary financial advisor.
Time to start saving and investing is today.
Let me know your thoughts in the comments section. What long-term investments you like and what you recommend others do as well.