Welcome to Appetite for Investing, the number one site to learn how to pay off debt quicker and learn the basics and beyond of investing in the stock market for your retirement. This site was created after the realization investing in the stock market isn't at all complicated in and of itself; it only seems complicated because the financial institutions want you to think it is.
If you take the time to learn the basics and invest for the long-term, you will be fine. And by long-term, that means 40 years or more. And by easier, that means learning how to not get taken advantage of by “financial advisors”. They don't want you to know that you're being ripped off and that you aren't supposed to constantly buy and sell stocks. They'll only suggest that you do buy and sell if they aren't seeing enough activity from you.
It's very easy to get started, especially when you're just beginning your career. Just take a look at the example below:
Say you buy a large Dunkin' Donuts coffee for breakfast and lunch. That's about $2 per coffee or $4 per day or $960 per year if you factor in four weeks of vacation (5×4=20 days vacation; 5×52=260 working days; 260-20=240; 240×4=960). That might not seem like much, but when you multiply 960 by the average performance of the S&P 500 by 40 years (putting the $960 away for retirement) that $960 turns into $43,448.89:
And even better, when you add an additional $960 every year for 40 years, that number balloons to $468,337.74:
Look at all of that interest just from two cups of coffee saved. Yes, saving money from coffee seems like it makes no difference in the grand scheme of things. And you're right. When you're making $160,000 it doesn't. But when you're 23 and you're making $35,000 with 40+ years of work ahead of you and you need to pay for rent, compound interest can help your retirement fund more than you realize as shown above, especially if you put it in a Roth IRA.
Also, consider your lunch. On average if you eat out for lunch every day you'll spend around $10, at least, if you're in a big city. According to health.com a homemade lunch costs $3-$5. Let's say it costs the higher end of $5. You can save $5 per day or $1,200 per year if you work 240 days a year.
Add $1,200 to $960 and multiply it by 40 years at a growing rate of 10% (average performance of the market not accounting for inflation). It comes out to $97,759.99 if you never make another addition to this:
If you invest the same amount annually, it comes out to be $1,053,759.91…
All from coffee and sandwiches. You can easily do this if you just pay attention to the little things you're paying for that you think don't matter in the long run. If you add up all those things, whatever they may be, you'll probably find it's a similar situation.
Yes, these seem to be too small of purchases to make such a big deal out of, but when you're just starting out in your career, the savings and compound interest have a bigger impact than you realize. It's also good to get in better spending habits so you're not drowning in debt later on.
And get this, let's say you make $35,000 and have a company 401K matching plan. The plan is the company will match 50% of your contributions up to a maximum of you contributing 6% of your salary towards your 401K, which is standard. That's a total of 9% of your salary, which is $3,150. You won't even realize that money is gone from your paycheck.
So now you add this to your retirement savings, bringing you to an annual savings of $5,310 including the money saved from above. And this is assuming the absolute worst that you will never get a bonus and you will never advance in your career to increase your salary. Here's what that looks like after 40 years:
And, mind you, this is considering you're investing all of your savings into an S&P 500 index fund. There is never a good reason to invest your retirement savings into bonds. Bonds will only kill the value of your saved money because of inflation. The rates of bonds hardly ever keep up with the rate of inflation. Keep it simple, invest in an S&P 500 index fund and you'll have over $2.5 million no problem. Of course, you will want to do more as you progress, but this is a great starting point.
That being said, this platform is here to help you get on your way towards financial freedom without the ridiculous fees and sub-par performance from a financial advisor.
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