Is it hard to get rich? No, when you are young.
It’s fun to play with financial calculators and see what happens.
Imagine you have just graduated from college, you are about 22 years old, and I have just started your first real career. If you invest $100 a month in an IRA that grows 10% a year, you will have $865,000 by the age of 65. The 10% annual aggregate growth is about what you should do if money is invested in the S&P 500 with no liability. Reference bag.
So about $23 a week or $3.30 a day will come close to becoming a millionaire.
If you donate the full $4000 per year currently approved to the IRA (up to $5000 in 2008), you will have $2,600,000. For about $11.00 a day, you could have a small fortune.
If you do not want to take advantage of the stock market because it sometimes goes down, you would not have more than $600,000 if you could get a 5% return.
If your grandmother leaves you $10,000 in her will and invests for the same 43 years at 10% without adding another cent, you will have more than $600,000 if you put it in a secure tax account.
The time and energy of the combined interest are next to you. So if you are in your twenties and want to get rich, do whatever you can to cover that IRA contribution. Every day, postponing your money may not work for you.
However, many 20-year-olds need money for more important things, such as new cars and HDTVs. You also have a school loan to pay, children to raise and a new mortgage to pay. But if you put your life first and stick to a budget, $11.00 a day is possible, though you may have to draw here and there.
Imagine that many people spend their lives paying for other people's loans. If you save and invest, some people will pay you to spend your money. It is more fun to see your money working to get rich than it is
You have to work for yourself.
Think about the impact it will have on your financial future. If you bought a used model car instead of a new one, you would probably save $10,000 or more depending on the model. That $10,000, as noted above, will grow to about $600,000 by age 65 when invested in tax-protected accounts.
Now look at it, the extra money you spend on that new car that you are looking forward to and should have now, will cost you $600,000 when you are 65 years old.
And the car had long been turned into cans.
Maybe I could buy a car too, but it helps to consider the consequences.
It gets harder and harder to get richer as you get older. If you wait until you are 32 years old and set $4000 at 10%, you will have $975,000, which is still a decent price.
When you are 42 years old, you will be able to save only about $350,000. If you are 50 again
You can start depositing $5000 today, you will have $175,000 when you are 65 years old.
Everyone knows that Social Security will not allow you to retire comfortably. Even if the system were to continue to pay off permanently, which is doubtful at the moment, the money you earn will be far from generous and tax-paying. And you may have a good pension plan at work now, but you will be able to hold on to your current job
Retirement?
If you have a Roth IRA, you can deduct income tax up to 59 year
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