I enjoy spending time with my brother more than with most people for the following reasons:
- When someone has known you for your entire life, you never have to be anything other than who you are.
- He is incredibly easy to get along with, most of the time.
- He knows more about investing and financial matters than anyone I know.
David was the one who got me started investing. He picked out a fund in which he thought I should invest and fronted me the capital for the initial buy in (which I am paying back, haters). The last time he was in Afghanistan, he sent me a long email detailing the plan, the repayment schedule, and giving me all kinds of data to support his recommendation.
My thoughts were in this exact order:
- Ooo! An email from David!
- Whoa, that’s a lot of words.
- If he thinks I’m gonna let him give me…no, wait…repayment, cool.
- Well, if he thinks it’s a good idea and is willing to front his own money to do it…
Each month, an automatic transfer takes $50 out of my checking account and deposits it into a Mutual Fund. It is a medium risk fund and even during the Great Recession of 2008 when a lot of people lost a lot of money, it continued to grow, though slowly for a bit. It has since picked up steam.
This is literally everything I know about the fund. I wish I was kidding.
I’m an intelligent person and I love spreadsheets, but when it comes to investments and planning for my future, I get the same look on my face that my beloved Labrador Retriever, Littleman, used to get when I’d speak to him in French.
Why yes, Simone, I hear you and I’m sure you’re right, though I have no earthly clue what you’re saying, as I am a dog.
Here’s what I do know: starting early is key. Remembering that I know almost nothing about investing, let’s run a few numbers, shall we?
If you invest $50 per month ($600 per year) in a fund making 8% compounded annually, starting at age 25, you’ll have $111,661.29 at age 60. If you wait ten years, and start that fund at age 35, you’ll end up with $51,810.46. Less than half. LESS THAN HALF. See?
These numbers imply that your 25-year-old salary is the best you’re ever going to do, ignores the initial deposit, and assumes that you’ll never be able to contribute more than $50, which isn’t likely. At least, I hope not. So my recommendation is this: start now. Contribute whatever you can, but make it a priority. Find someone knowledgeable and seek their council. And for goodness sake, don’t ask me for advice.
I have David for that.