As a young entrepreneur in your 20s or 30s, it’s hard not to focus on immediate profits and revenues.
After all, everyone wants to have a solid income so they can have fun and enjoy life.
Unfortunately, very few entrepreneurs spend as much time thinking about future financial security as they do focusing on present comforts.
While your 60s may seem like a long way off, now is the time to prepare for retirement.
Overwhelmed by Investing?
Do terms like, capital appreciation, long term growth, income generation, diversification, stocks, bonds, alternatives, and options leave you feeling dizzy? If so, you aren’t alone.
You don’t need to understand how all of these things work. You simply need to recognize the importance of investing for retirement and then develop a relationship with a financial advisor who can coach you through various investment strategies that can hopefully allow you to accomplish both short and long term goals.
Start Saving in Your 20s (or ASAP)
The best way to not feel overwhelmed by the thought of investing and wealth management is to dive right in.
If you’re in your 20s, there’s no better time to start than right now. Why can’t it wait until your 30s or 40s, you may ask?
Well consider the following example brought to you by CNN Money.
Let’s say you’re 25 years old and you begin setting aside $3,000 per year in a tax-deferred retirement account for a period of 10 years, and then you never put another dime in it after that.
By the time you reach 35 years old, you will have contributed $30,000. Assuming a seven percent annual return rate, that investment will have grown to right around $338,000 by the time you’re 65 years old. All from a measly $30,000.
Now, let’s say you procrastinate and don’t start saving until you reach 35 years old. You decide to put the same $3,000 away per year, but figure you’ll do so for an entire 30 years. By the time you turn 65 years old, you will have invested $90,000.
Despite an investment that’s three-times as large, your account will only equal $303,000. What a difference.
By starting your retirement investing in your mid-20s, as opposed to your mid-30s, you could end up with hundreds of thousands of dollars more in your portfolio.
This could ultimately mean the difference between living comfortably for the rest of your life and pinching pennies just to get by.
You don’t want to regret your decision in 30 years.