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I am 28 years old, and through an impulse to buy Canadian marijuana stocks I got into investing. Since I made the leap from employee to entrepreneur, I don’t contribute to a pension or employer retirement plan. My wife’s father is in retirement now, they have a nice home and a decent nest egg.
A lot of young people aren’t thinking about life when they are 60, 70, or 90. If you have contributed anything to a Registered Retirement Savings Plan, and you are under 25, congrats! You have made the first step to ensure you will be taken care of when you are old.
Its scary how many people aren’t planning for retirement.
My introduction to personal finances and investing was sort of a revelation for me. I felt compelled to spread the word, even at inappropriate settings like parties. I noticed that other people my age were totally willing to talk about investing. Many of them seemed embarrassed they didn’t really understand the concept of investing at all. It was scary how many didn’t plan for retirement, but it was even scarier how many didn’t plan for anything at all.
Most people just accept that they are going to work until they either get too sick to work, or too old. Older people who talk about nearing retirement are cynically skeptical that there will be enough pension to pay for a basic lifestyle standard they would find enjoyment in. They act as if they were forced into this problem!
Its risky to not invest in the stock market.
Lookup the S&P 500, it is basically the 500 most powerful companies in the USA. Essentially, this IS the stock market. Lets say you were 20 years old in 1991, when Grandma left you an inheritance. You get convinced to take that money and buy ten shares of S&P 500, and forgot about it. It's now 2019, and you find this old investing account with 10 shares of S&P you bought for $3200 is now worth almost $30,000. Imagine if you kept investing money in that time. This is basically how to save for retirement. This is called “taking a long position” in the investing world.
Another thing most people accept is that they are going to retire when they are 65 or older. This magic number seems like it should be a rule, but it is not. The only reason most people work until 65+ is because that is when you are eligible to take out your government pension. If you invested in retirement you pay for your own cost of living. But you can retire whenever you want to. As soon as you feel you have the resources, if you buy assets (assets are things you own that make money) such as stocks, or even rental property you can just chill.
Stop bleeding cash on cars, credit, and crap.
If you think all of this is out of reach for you, think again. Young people are going out for dinner, getting car loans, paying too much for housing, purchasing new phones and other luxury items, and then complaining they are broke. This is essentially what marketing and advertisers want; they want you to feel compelled to spend all your disposable income and beyond. That’s where credit cards come in. If you are 25 and want to retire by the time you are say, 35. You absolutely can. But you need to get a grip on your spending.
The average car payment in America is $500 a month. Most people never pay off the full car loan, they just upgrade a to a new vehicle with a new loan. Let's say you grew up and stopped caring what strangers think when you drive on the highway. Drive a modest car while you are young, and pay yourself a car payment every month in stocks or mutual funds. This is all it takes to become wealthy. Spend your money on things that make money. Your car will instantly be worth less the moment you drive it off the lot. Your investments will likely be worth more, perhaps exponentially so, the more time goes on. Becoming wealthy isn’t about the money you make, its about the money you keep. Then when you go to buy a nice car you can pay for it in cash, and keep investing.
"Are You Entitled To A New Car?" - Dave Ramsey Rant
Watching this guy got me out of debt. I paid off over $30,000 in less than two years. Bye bye student loans. Now instead of paying off loans, I am investing in an early retirement. You can do this too.