I have a nephew graduating high school and heading off to college. With that comes a lot of thinking about how much to invest in college, how much debt to take on, and what your earning power will be when you graduate. It also gets me thinking about the importance of investing. It’s something many people realize too late in the game.
I’ve been thinking for weeks about how to put this into a blog post but then I listened to a recent “How To Money” podcast episode and it covered it perfectly. So whether you read this post or not, consider checking out episode 842 – Millionaire Mission.
When I was young, investing seemed really complicated, but it doesn’t have to be complicated. That podcast is an interview with the guy behind MoneyGuy.com, but there are plenty of other popular financial sites that will help you avoid debt, make smart decisions, and get in the habit of saving 20% or more of your income.
I don’t want to try to summarize every little thing because they do it much better than I can, but here are a few key points:
- Save money in the market. Literally anything helps. There’s a great page on the “Wealth Multiplier” at MoneyGuy.com which shows the impact of compound interest. If at age 20, you put $95 per month into the market, you’ll have a million dollars by the time you’re 65! Or putting it another way, if you spend $1 when you’re 20, that takes away $88 when you’re 65. Early investing has unfathomably large impacts on your future.
- Be conscientious about every dollar that you spend. Look at a report at the end of every month and year to see where your money went. For example, let’s say that starting at 20, you spend $10/week on coffee. If you invested that instead, you’d have $145k when you’re 65. AARP has a great calculator for showing the value of regular investing.
- If investing is complicated, you’re doing it wrong. Start by maxing out your 401k and/or your Roth IRA. These give you tax advantages later so there is a limit on how much you can do per year. Once you hit that limit, open an account with Fidelity or Vanguard and buy an index fund like VTI. Do not invest in individual stocks because that’s a guaranteed losing game over the long run. (For more info on that topic, read this book.)
There’s so much more to learn, ways to pay minimal taxes, getting completely out of debt, etc, but the main message here is start investing TODAY. You literally cannot afford to wait.
Invest TODAY
I have a nephew graduating high school and heading off to college. With that comes a lot of thinking about how much to invest in college, how much debt to take on, and what your earning power will be when you graduate. It also gets me thinking about the importance of investing. It’s something many people realize too late in the game.
I’ve been thinking for weeks about how to put this into a blog post but then I listened to a recent “How To Money” podcast episode and it covered it perfectly. So whether you read this post or not, consider checking out episode 842 – Millionaire Mission.
When I was young, investing seemed really complicated, but it doesn’t have to be complicated. That podcast is an interview with the guy behind MoneyGuy.com, but there are plenty of other popular financial sites that will help you avoid debt, make smart decisions, and get in the habit of saving 20% or more of your income.
I don’t want to try to summarize every little thing because they do it much better than I can, but here are a few key points:
There’s so much more to learn, ways to pay minimal taxes, getting completely out of debt, etc, but the main message here is start investing TODAY. You literally cannot afford to wait.