But is possible to prepare for retirement.
If you want to save enough for retirement, you will never succeed. Instead of saving, the most likely way to succeed is to invest, not just save.
So when I say “Instead of saving…” what I mean is not just save alone; you do need to save and invest. Both, at the same time, but not at the beginning. In the beginning, you save.
How to Save. Putting money aside from every paycheck is how to get started and how to continue. Does that sound simplistic? No, it is not. It is just simple.
First, about Savings…
If one is starting out, with little or no savings and no investments, then savings should be the first priority. Savings for week to week and month to month expenses, unexpected expenses, an emergency fund: these come first.
Eating, paying the rent, daily transportation expenses, being clothed… all of these are basic needs that need to be met before considering what to do next.
What Do You Mean “Both, at the same time, but not at the beginning” ?
Saving is not enough. Whatever the interest rate, cash in savings can lose value due to inflation. (Even if interest rates were not “low”, it is not likely saving money could fund a retirement.) So something other than saving is needed. That something is investing.
On the subject of saving, there is a place that is worse than a savings account: under your mattress. Don’t even think about it.
After these are savings goals met, then one can begin to consider investing.
I will describe how I handle savings and accounts in a future post.
What works for one person may not work for another. Since there are so many ways to invest, and we want to be safe, expect growth, and avoid being taken advantage of, it is prudent to not do something rash. The latest hot stock tip someone tells you is not a way to invest; that’s a lottery ticket.
Everything is a risk. Waking up in the morning is a risk. Not waking up in the morning is even a greater risk. Putting money in a bank account is a risk, albeit a small one.
Investing means putting your money at some risk. Regardless of what you invest in, there always is some risk. Attempting to avoid all risk is unreasonable and basically impossible.
Undue risk will ultimately lose value. So a balance is needed. My take on what is acceptable risk in future posts.
When I first started thinking about investing, my main goal was to find a method that worked for me, something I felt comfortable with, something I felt I was in control of, and not being taken advantage of. It took some time, but it was worth the time.
In future posts, I will detail what I did and how it works for me. What works for me may not work for you. So what each person needs to do, in my view, is to find their comfort level in how and where to invest.
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