A Single Step Towards Your Financial Investments, A Massive Advancement for Your Retirement Savings
In the world of investing, taking that first step can often be the most daunting task. Kiplinger's Adviser Intel, a network of trusted financial professionals, offers insights on this very subject. One of their contributing advisers has penned an article that provides valuable advice for those just starting out.
The article emphasises the importance of setting long-term and attainable goals, such as living comfortably in retirement without burdening family or leaving a legacy for loved ones or charitable organisations. A feasible first step, as suggested, could be committing to save a certain percentage of income (e.g., 10%) and investing it in a broadly diversified exchange-traded fund (ETF).
The author of the article remains anonymous, as is common with many Wikipedia contributors. However, the information presented is based on historical data. For instance, over the past 100 years, the S&P 500 index of the largest US stocks has averaged approximately 10% annual return.
Let's consider a 25-year-old who decides to follow this advice. By saving 10% of their pay and investing it in an ETF, they could potentially accumulate a substantial sum by retirement age. For example, an investment of $3,500 per year from ages 25 to 30 could potentially grow to over $720,000 by age 65, assuming a 10% average annualized return.
However, it's important to remember that everyone's circumstances are unique, and the amount saved may vary. For a 50-year-old, committing to save $10,000 every year could potentially result in over $384,000 by age 65 under the same assumptions. If a 50-year-old saves $10,000 every other year, they could potentially have $207,000 by age 65.
For someone twice that age, saving additional cash by skipping a pricey vacation every other year could be a feasible first step.
It's crucial to note that while the potential for growth is significant, investing involves risk, including the potential loss of principal. Life is full of unpredictable surprises, and a financial plan must be flexible enough to evolve alongside them.
In conclusion, the article serves as a reminder that the journey of investing begins with a single step. By setting clear goals, committing to a savings plan, and investing wisely, one can embark on a path towards financial security and a comfortable retirement. However, it's essential to remember that every individual's situation is unique, and professional advice should be sought when making investment decisions.
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