Millennials Need To Stop Saving For Retirement Says Broke Millennial

While researching my second book, “Broke Millennial Takes On Investing,” one interviewee shared a horror story about a client who called into the brokerage firm where she worked and inquired about the balance of his retirement account. It turns out that when this client signed up for a 401, he didn’t select actual investments, and for decades he had just been – quite literally – saving into his 401. Sure, there was a decent chunk of change, but not enough to comfortably retire and nowhere near what could’ve been there had the money been properly invested and reaping the rewards of compound interest. I was searching for a book to give my sister and younger cousin . This book is equally great for people that are just entering the workforce and need an intro to personal finance and people who have run into some challenges along the way.

Broke Millennial: Stop Scraping By and Get Your Financial Life

Your financial commitments are less, and you have flexibility, and making decisions may feel tough then, but it’s easier to make then than when you have a mortgage and a family,” explains Julie Virta, senior financial advisor with Van­guard Personal Advisor Services. Money nerds make a big deal about inflation because your money will essentially lose value over time if it isn’t at least keeping pace with infla­tion. From January 2008 to January 2017, 2 percent represented a decent rule of thumb for what to expect inflation to be. And we’ll get to whether it’s the right financial move for you to start investing now. No matter what route you choose, just be sure your money is actually being invested and not simply saved in a retirement account. This intimidation factor is really what inspired my second book, “Broke Millennial Takes On Investing.” I’m not an investing expert, instead, I serve more of a translator function.

Broke Millennial: Stop Scraping By And Get Your Financial Life Together

That’s $5,000 a year from Jake + the $2,000 employer match he receives. He, too, receives an average 7 percent return on his investments. Meet Jake and Stacey, twenty-six-year-olds who would like to retire at age sixty-two. They’ve just started new jobs, and neither one has ever invested or saved for retirement before.

Broke Millennial: Stop Scraping By and Get Your Financial Life

Let’s say the client averaged out to putting $500 a month into a 401 for 40 years. But with the money just sitting in a savings account, it would have ultimately totaled just over $240,000 – especially since most people are earning only about 0.01% annual percentage yield on their savings accounts. Even with a higher interest rate of 2% on savings account, that money in savings still wouldn’t have topped $370,000. Seasoned investors, personal finance writers, financial advisors, and pretty much anyone doling out money advice will wax poetic on the ad­vantages of starting young and being consistent as an investor.

Great book for people in their 20s and 30, but also for anyone who wants to know the latest ways to bank in the modern age. I found the advice helpful on how to budget and make a plan for paying down debt, while also putting money into a savings account. Your money needs to keep up with inflation, especially when you’re saving for long-term goals like retirement. Just putting that money in a savings account will erode your purchasing power because savings accounts don’t offer great interest rates. In 2019, many bank accounts only offer you a measly 0.01 percent APY. That means if you have $1,000 in savings, you’ll get a whopping $0.10 in interest by the end of the year. Some banks offer higher rates, like 1.75 percent APY, which would net you $17.50 in interest, but that’s still a pretty measly rate if that’s where you’re putting your entire life savings because you aren’t investing.

Not Worth It, Especially For Older Millennials

Using a target date fund is just a way to remove the intimidation and confusion from the first step of the process. If you’re a cash-strapped 20- or 30-something, it’s easy to get freaked out by finances. But you’re not doomed to spend your life drowning in debt or mystified by money.

They each earn $50,000 a year, and their employer offers a 4 percent match on their 401s. Investing allows you to take advantage of compound interest in a way that socking your money away in a savings account doesn’t. I’m hoping you opened this book because you have at least a vague interest in investing, but like so many investors before you, including myself, you just have absolutely no clue how to start. “Erin Lowry’s Broke Millennial is a charismatic guide to personal finances for people seeking a modern, thorough introduction to the topic.” “She offers clear discussions of everything from individual stock picking to impact investing to the benefits of investing even when you’re risk averse.” Even if you earn a lot more later in life, it doesn’t always mean you’ll have hundreds to thousands of spare dollars a month to try to catch up on the investing you should’ve done a decade ago. “What you forget when you’re a young person is that you don’t have a mortgage yet, you don’t have a family yet.

  • “She offers clear discussions of everything from individual stock picking to impact investing to the benefits of investing even when you’re risk averse.”
  • New employees in an office get a lecture from a well-intentioned older colleague or parent about the importance of saving for retirement.
  • But you’re not doomed to spend your life drowning in debt or mystified by money.
  • Investing allows you to take advantage of compound interest in a way that socking your money away in a savings account doesn’t.
  • This is marketed to concerned parents and weird uncle’s who want to teach their realitives about money.
  • They each earn $50,000 a year, and their employer offers a 4 percent match on their 401s.

I researched and interviewed many people far more experienced and knowledgeable than myself and translated that knowledge into a more easily digestible package for a rookie. Or, more appropriately, I was supposed to do the research required to build a portfolio. But that can be an overwhelming proposition, especially to someone with no education in investing or even a basic understanding of the terminology.

Broke Millennial Takes On Investing: A Beginner’s Guide To Leveling Up Your Money

In this second book in the Broke Millennial series, Erin Lowry answers those questions and delivers all of the investment basics in one easy-to-digest package. Tackling topics ranging from common terminology to how to handle your anxiety to retirement savings and even how to actually buy and sell a stock, this hands-on guide will help any investment newbie become a confident player in the market on their way to building Broke Millennial: Stop Scraping By and Get Your Financial Life wealth. It wasn’t the first time I’d heard a version of this urban-legend-style investing tale. I’ve even known a few people who found themselves in similar situations. Luckily, they figured it out only a couple of years into contributing to a 401, so they were able to log into their accounts and select funds that aligned with their investing goals. Their money was in the stock market in time to minimize any damage.

Broke Millennial: Stop Scraping By and Get Your Financial Life

The rea­son for this isn’t wishful thinking about what could’ve been if they’d only started sooner or been a little more aggressive with their contributions to the stock market. The problem is that the language we use about preparing for retirement is misleading. New employees in forex an office get a lecture from a well-intentioned older colleague or parent about the importance of saving for retirement. All personal finance books harp on why it’s critical to save for retirement. Brokerage firms publish studies about how much people are saving for retirement.

Sure, there will be years of low returns, but the average annualized return of the stock market will (most likely, because I can’t make promises about market performance) outperform inflation. We know this because we have de­cades and decades of data, and even factoring in terrible years, it still av­erages out to beat inflation. However, this argument Currencies forex does make the assumption that your investments are diversified over a variety of sectors and companies and are not all in a single stock. Erin Lowry discloses different money matters in this book, including practical steps to master financial matters of young people. Jake tries to play catch-up and puts 10 percent of his $50,000 salary toward his 401.

Great Book!

It’s not surprising why people often delay investing for retirement or slot it on the bottom of their to-do lists. “Erin is uniquely capable of making even the most difficult-to-understand financial concepts into something you actually want to talk about, and investing is no exception. If you are intimidated by the idea of investing, let Erin prove you wrong on both counts with this fantastic book.” Criticisms of target date funds include the higher expense ratio and that it isn’t tailored to your specific eur situation. For some investors, that can mean ending up in a portfolio that’s too conservative too early, which results in missing out on critical returns. An increase of $144.80 in two years might sound like chump change, but imagine how quickly you can take advantage of compounding if you’re contributing to your investments monthly or even annually? In the scenario just described, you didn’t put in another penny after the ini­tial $1,000 investment and you still earned $144.80 in two years.

Stop Living Paycheck to Paycheck and Get Your Financial Life Together (#GYFLT)! If you’re a cash-strapped 20- or 30-something, it’s easy to get freaked out by finances. But you’re not doomed to spend your life drowning in debt or mystified by money. It’s time to stop scraping by and take control of your money and your life with this savvy and smart guide. Luckily, there’s no rule dictating that you must stay locked into a target date fund. You can always go back and rebuild your investment portfolio in a 401 or IRA once you’ve had time to do some research and become an educated investor, or seek help from a financial professional.

This includes some good fairly basic advice, and then a ton of weird condescending asides sandwiched between bizarre pandering attempts at #millenialtalk. This is marketed to concerned parents and weird uncle’s who want to teach their realitives about money. He has more than 10 years of experience in trading and helps people get rich. Anna’s lessons, interesting articles in the field of financing will always help you manage your money properly.

Broke Millennial

It’s time to stop scraping by and take control of your money and your life with this savvy and smart guide. The earlier you start, the less you have to invest each month or year in order to reach your goals. Trying to play catch-up later is much harder than most people think. Stacey enrolls right away, putting 4 percent of her salary ($2,000) in her 401 in order to get her full employer match (an additional $2,000). For simplicity’s sake, let’s say Stacey stays at the exact same salary for the next thirty-six years, and that she receives an average 7 percent return on her investments.

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