It’s always hard to put money away, specially for something “boring” as retirement.
This is how I used to think about it in my 20’s and wish I would’ve paid more attention, or someone would’ve led me in a different path.
As I grew older, I understood the power of compound savings.
Here are 5 suggestions on how to start maximizing your savings, and putting money aside for your retirement.
1. Minimum of 5% of Your Monthly Paycheck
Set up a recurring deposit to an investment portfolio such as Vanguard, or services such as Wealthfront or Betterment, so that once a month they will automatically deduct from your bank at least 5% of your monthly earnings.
With an average rate of return per year of 8%, an insignificant amount can quickly pile up, in months, years, decades, and it will be snowballing into a small fortune that you will enjoy in your older days.
If you only put aside, let’s say $250/month, that is $3,000 per year. However that sums accumulates and is constantly being re-invested. That is where the real power of compound investing lies.
2. Drop Your Vices, and Save It Instead
Easier said, than done, but that daily cup of coffee can become costly if you have it every day, all year long. That could amount to thousands per year. And again, read point 1 above, better invested than sipped.
3. Don’t Spend On Useless Things That Will Devaluate
Cars or boats are some of the worst investments you can ever make. They are immediately costing you and bleeding you money the moment you buy them. And, they devaluate in pricing.
Instead, if you do have the money to spare, think about investing in real estate, stocks, or businesses you believe in – – always be looking for the upside potential.
4. Make Better Financial Decisions
There are things that you do need to look for the best, and don’t worry about how much it costs. An example is a good Tax Expert.
The moment you start working with a great Tax Advisor, his or her fees will cost you more, but he or she will end up saving you a LOT more. And, they will probably help organize your finances much better.