The #1 Investment Nearly Anyone Can Afford

If you get a paycheck then there is ONE investment you should not pass up.

Anyone who earns income can open and contribute to an IRA. But, for some reason lots of people don’t.

Four common excuses for not contributing to an IRA are:

1. You are young,

2. You don’t earn very much,

3. You have too much debt, and

4. The economy.

#1 You are Young:

This is the worst excuse ever for not making contributions to an IRA. If you are 18 and you work at the local pizza joint (or any other part-time job [though probably not babysitting, unless you report that to the IRS]) you CAN have an IRA account. In fact, you should. Everyone over the age of 45 will tell you that they hate having to play catchup on their retirement investments.

Cure: Forget that IRA stands for Investment Retirement Account it’s misnomer. IRAs are really wealth building accounts and the younger you start the more you’ll have for the future. You don’t even have to wait until you are old to access the money. You can use IRA funds, penalty free for things like buying your first house or paying for your education.

#2 You Don’t Earn Very Much

There is a clear reason that this excuse is a #2. It’s lame. IRA contributions are usually a small percentage of you overall pay. If you are able to setup direct deposit deductions you won’t even miss the little bit that goes to your IRA. And, while your regular contributions may be teeny-weeny, they’ll multiply over time.

This chart shows that if you deposited just $100 a month, every month from the age of 18 years your IRA could grow to nearly $600,000. Okay, that may not seem like enough for retirement, however, chances are that as you mature, you’ll be able to add more than $100/month. Also, combine the IRA with other easy investments, such as a 401(k) and your financial picture looks mighty good.

#3 You Have Too Much Debt

Debt is an awful monkey that many of us carry around. It distracts us and weighs us down. However, just because you are carrying around debt, doesn’t mean that you can’t put a few dollars away for your future. If you recognize that you have too much debt and are working to pay it down, then you deserve to prepare for future wealth building. But, remember this is a time game. The sooner you start the better. Don’t gamble on saving more later. Again, refer to the chart above.  Notice how that curve takes a sharp upward turn, that’s what time does for you. Any little amount you can put away now will start to multiple like rabbits in the future.

Reward Yourself: If you are working hard to relieve your debt, than you already know what it like to tighten your budget. Once you start eliminating bills, keep the belt tight. Send that money toward your IRA and start building your wealth.

#4 The Economy

Letting a down economy discourage you from planning for your future is just nutty. You can restrategize your IRA investments to play more conservatively when the economy is performing badly and change it up when things are flowing. The balance of life is that nothing is constant. Things will always change and there is no way to really predict what the future will be like. So better to squirrel away some funds now.

First Paycheck photo by orphanjones John Lambert Pearson

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