When Should Young Adults Start Investing for Retirement?
This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article discussing two key reasons why now is the best time to start investing for retirement:
As young adults embark on their first real job, get married, or start a family, retirement might be the last thing on their minds. Even so, they might want to make it a financial priority. In preparing for retirement, the best time to start investing is now — for two key reasons: compounding and tax management.
Power of Compound Returns
A quick Internet search reveals that Albert Einstein once called compounding “the most powerful force in the universe,” “the eighth wonder of the world,” or “the greatest invention in human history.” Although the validity of these quotes is debatable, Einstein would not have been far off in his assessments.
Compounding happens when returns earned on investments are reinvested in the account and earn returns themselves. Over time, the process can gain significant momentum.
For example, say an investor puts $1,000 in an investment that earns 5%, or $50, in year one, which gets reinvested, bringing the total to $1,050. In year two, that money earns another 5%, or $52.50, resulting in a total of $1,102.50. Year three brings…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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