Everyone knows that saving for the future is critical. We have all had to make sacrifices to buy large ticket items, such as our first car and home. While discussed probably more than any other financial topic, preparing and saving for retirement is still a blackhole concept filled with intimidation and uncertainty.
Starting early, even if it’s small, is probably the best way that I can think of for people to begin their retirement savings journey. There are so many priorities competing for our money while we’re younger – student loans, transportation needs, a home suitable for a growing family, children’s education – the list is endless. However, as soon as you begin earning a regular paycheque, put a small amount away on a monthly basis. By doing this, you will automatically acquire a secret weapon, and it’s the most powerful when you’re young - compound interest.
Think about this for a minute: If you’re 25 and put away $100 a month until you’re 40, at 6% interest you’ll have almost $30,000 to add to your retirement portfolio. While $30,000 may seem like a drop in the bucket at age 40 for the lofty retirement savings required these days, just hold that thought… Without adding one more dollar to this amount, by the time you’re 65 this $30,000 will have grown (at 6%) to $130,000! This is why beginning the practice of savings early in life is so important. Use the compounding power while you can, because the older you are, the less powerful it becomes.
Proverbs 6:6-8 says, “Go to the ant, you sluggard; consider its ways and be wise! It has no commander, no overseer or ruler, yet it stores its provisions in the summer and gathers its food in the harvest."
Maria Dawes, Portfolio Manager
Capstone Private Wealth