If you can do $100 a month in S&P500 and other large Indexes from age 18 and up, you are good. You'll be better if you increase your contribution average every year.
Start as soon as you can. Don't fucking touch it until age 59.
I keep this special account separate from my other retirement accounts.
The bubble has been coming forever. It’s always coming. If your horizon is long term, then history suggests the market conditions at the time of your early investments will matter much less than the compound interest you’ll benefit from. In sum, don’t time the market, just invest in low fee index funds
I think the multiplier for someone who is 18 now is something like 190, meaning for every $1 you contribute to a Roth IRA it's worth $190 at retirement age.
Wait, for real? What if someone is 35 and has a decent 401k currently, but just wants to make up for getting a late start? Could doing this ($100 monthly in S&P500, etc.) still somewhat pan out?
For you, depending on your income, you should start a Roth IRA. Max contributions are $7500 a year. Put at least that IMO. When you hit age 50, you get to increase your contributions, you should do that.
100 per month getting the market average of 10% for 27 years or till you are 62 would be 166k. Let's inflation adjust it at 3%. That would be 96k in today's purchasing power. That plus SS would be a pretty meager retirement. Let's go longer and work till 70. $181k (that is about the median) in today's money plus a full SS and that is probably okayish, but working till 70 for just okay is still not my idea of a good time.
Let's double that to $200 per month. $362K at 70 or $193K at 62. Plus SS and maybe a paid off house and that starts to look a lot more sunny and like more of a win.
That 18 year old has a lot more time than a 35 year old for the compounding to happen.
You say that you have a decent 401k already, how much? The above was starting with zero. If you have something to already compound out that would vastly help those numbers.
No, losing out on 17 years means you need to put aa lot more than $100 per month in for the same result but starting now is the best time if you haven't.
If youre 35 instead of 18 youve missed out on 17 years of interest growth which is enough to double twice. You will need more than 100 a month to make up for that lost interest.
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u/Catch_ME 5d ago edited 5d ago
If you can do $100 a month in S&P500 and other large Indexes from age 18 and up, you are good. You'll be better if you increase your contribution average every year.
Start as soon as you can. Don't fucking touch it until age 59.
I keep this special account separate from my other retirement accounts.