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Inspired Investing

I was thinking about a post I did on Index Funds a couple days ago. I made mention of how much you would have saved if you invested $1,000 30 years ago, and subsequently invested $1,000 each year. (As a reminder, that amount was $260k.) Of course, that is at 12% average annual interest, which as been the historical average for Index Funds. So, you are probably thinking “why in the world is she bringing this up?”

Here’s why… I’ve talked about starting small many times, I do over and over again with friends and family, really anyone who will listen. I truly believe that starting, and if that means small, is the hardest part. I could have used a number much larger than $1,000, but I didn’t for a reason. The average annual salary in the US is $40,000, so you will find me using that amount quite often. $1,000 is 2.5% of that salary. $1,000 broken out over 52 weeks = $19.23. If stashing away $19.23 per week is too steep, lets look at stashing away $10/week. If you decided today that you were going to open up an automated fund and put in $10/week. Let’s also say that you are 40, expect to work until you are 70, and are going to budget for 25 years in retirement.

This works out to $520 stashed away annually. If you get a 12% return rate, after 30 years, that would be $140,500 (roughly.) Broken down further and not taking into account the interest you will gain even after you’ve entered retirement, that $10 investment would become an extra $468/month you could draw to help cover living expenses (you’ve essentially turned $10 into over $100.) Now, lets say you COULD find and extra $20/week to stash away. That number then becomes $260k. That $468 becomes $867 (or you turn $20 into over $200/week.)

Imagine if this amount is $50 or $100. When I start playing with the numbers, I get so inspired. I love to think of all that can be, all of the possibilities that discipline and a continued focus on making the right choices. To steal from the jist of a recent Suze Orman blog, is a daily latte worth the freedom you are not allowing your future self to have? And, of course it could be anything – if you are not a coffee drinker, maybe it’s the daily lunches out when you could save by brown bagging it. You got this! <3 Bobbi

FYI – Suze Orman’s Blog:

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