Invest As Much As You Can Now, So You Will Have Options Later

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Over the last few weeks the worldwide markets experienced a major correction. Trillions of dollars of wealth was erased from ledgers. While I feel for those who are at or near retirement, and as much as I hate seeing the lower numbers in my retirement account, this has motivated me to invest more money. One…

Over the last few weeks the worldwide markets experienced a major correction.

Trillions of dollars of wealth was erased from ledgers. While I feel for those who are at or near retirement, and as much as I hate seeing the lower numbers in my retirement account, this has motivated me to invest more money.

One reason I am motivated is because the markets are substantially lower, and now may be a good time to increase retirement contributions.

The other reason I am motivated is because I know that the more money I invest now, the more options I will have later in life.

Compound interest is an extremely powerful force and the longer my money is working for me by compounding, the less I will need to add to it later in life.

My ultimate financial goal is retirement, and I want to ensure I get there with as little stress as possible.

Two biggest retirement questions: When can you retire and how much money do you need for retirement?

Unless your retirement is in a few years and you have a strong handle on your finances and expenses, these two questions are extremely difficult, if not impossible, to answer.

When can you retire? Because of this global financial crisis, many people have delayed their retirement date because their retirement accounts lost too much value. Many people simply cannot afford to retire right now.

This isn’t the first time this has happened either – the same thing happened when the tech bubble burst in 2000, which was compounded by the market drops following the September 11th attacks. Before that, the market crash in 1987 delayed retirement for many people.

Part of the problem for many people was poor asset allocation.

But even a portfolio with a strong asset allocation can be affected by a bad bear market and the owner may have to delay retirement. But the more you have stashed away for a rainy day and the better your asset allocation, the better you will be able to weather a bear market.

How much money do you need for retirement? Many people create formulas to answer this question.

If you want to retire at “x”% of your current income you need to save “x” dollars per year.

But all of that is just guesswork and makes assumptions on predicted inflation, return on investment, etc.

My retirement is 30 years from now and to be quite honest, I don’t think it is possible to make an accurate guess as to how much money I will need – at least not until I am much closer to retirement age.

Every person is different. Each person is going to have different retirement needs and goals. It’s important you do what YOU need to in order to reach your goals.

How to Start Investing

When most people hear investing, their minds automatically go to the stock market. If you want to jump into the stock market, more power to you, but there are plenty of other ways you can start your investment portfolio.

If your employer offers a 401k program, you should be putting as much in the plan as possible, especially if they match your contributions. A 401k should be the first place to start when you want to begin your investing journey.

In fact, there are several ways you can start your investing now, without having to get bogged down with all of the technicalities. There are programs and websites which can do all of the investing for you.

If you want to get started as soon as possible, check out something like Betterment.

The joy of Betterment is all you have to do is create an account, then answer some simple questions about yourself and your retirement goals. When you’ve done these few steps, and then their algorithm handles the rest.

Betterment will invest your money based on the answers you gave them. They will continue to re-invest the money it makes. In fact, the way they invest is going to change the older you get as you get closer to your investment goals.

Regardless of how you invest, it’s important you start as soon as possible.

Invest as much money as you can invest NOW

My solution to both of these questions is to invest as much as I can comfortably invest now, so that I have more options later. The younger you are, the longer you have for the power of compound interest to work in your favor.

It is much easier to answer the question “how much money can I contribute now?” than it is to answer “how much money will I need and how much money do I need to invest to get me there?

My retirement is as of yet an unwritten book. I don’t know when I will retire or how much money I will need in retirement. But I do know that the more I invest now, the less work I will need to do later, and the better off I will be in the long run.

Long gone are the days when your pension would take care of everything for you. If you don’t take control of your retirement, then you will find yourself reaching retirement age, but not be able to retirement.

Retirement can be an amazing time a life, as long as you do the work beforehand.



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About Ryan Guina

Ryan Guina is the founder and editor of Cash Money Life. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started Cash Money Life in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about military money topics and military and veterans benefits at The Military Wallet.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free account here.

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  1. Smart Money says

    I’ve been reinvesting all my dividends into buying additional stocks and also injected a lump sum into my superanuation retirement account during that period, which in hindsight was a great move that I made.

    Humans are greedy and fearful, at the same time. This ensures that cycles of boom and bust will occur in perpetuity.

    Ryan, with 30 years to go, sit back and relax in terms of your portfolio value fluctuating. I’ve got over 3o years to go before I’ll be in my sixties as well, so I never once panicked or worried over my fluctuating investment values. Just kept on enjoying life as if nothing had happened. (I must confess though, that I did liquidate 50% of my share portfolio in 2007 after the Bear Stearns incidence and the trickle of bad news from the US … so maybe that’s why I didn’t worry too much!)

    Asset allocation and diversification are one of the most important aspects of finance to understand. A lot of retirees and almost retired have lost out big time in this credit crisis because of poor asset allocation.

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