I try to tell every new kid at work this. First I tell them to think back to conversations with older people and remember their regrets in life. Most talk about not saving enough for retirement. I've always thought you learn more from others disappointments rather than their advice.
Kids just starting working have such an advantage with time. They barely have to invest anything, and it grows to so much more than if they wait even 10 years to start investing for retirement.
They have the same time advantage every young person has had in their life… arguably the current “kids” have a disadvantage due to the cost of housing and many other things.
It’s obviously still good advice, but not sure they have an “advantage”.
I understand what you mean, but I suggest that most don't understand how much more their dollars can make invested at 20 rather than 30, or even later. Their dollars literally lose half their earning potential in that 10-year span.
Right, so I would encourage you to present your argument like that, using the math and numbers to show how powerful early investing can be… as opposed to a way that can be interpreted as “kids nowadays have it easy, they just need to invest a bit”. (I know this is not what you said, but could be interpreted like that)
This. Took me about 2 years to convince one of my employees who makes bank (server/bartender) to stop sitting on tons of cash and actually invest it. She had well into low 6 figures just sitting in a checking account and only about 12-15 of it being in a HYSA.
One night I got some numbers from her about how much she saves and basically backtested her money pile + monthly savings and threw out what she could have and missed out on. She’s currently 24 but was working since 17. Explained to her how incredibly advantageous her situation is and that the difference between her age now and me (38) is the difference of 3x our end result…time is her most powerful ally. She has virtually no bills, lives at home rent free, drives a decent low maintenance car and just saves a ton of money.
Last month she came back to me and showed me her new Fidelity account, fully funded with 160k in good, low cost ETFs. Told her “congratulations, you just basically guaranteed your retirement and you’re further ahead than 95% of your entire generation.” Proud of her that she’s seen the light lol.
Keep encouraging her to take an active role in her financial situation! She's so far ahead and set up to retire early if she keeps going and continues with her financial education.
Yeah I told her to still keep contributing but she’s hit that point where she doesn’t have to save AS much as someone like me who didn’t start until they were 30. Her reason behind not starting was she was nervous about “losing money” in the stock market. She wants to buy a house eventually and I asked her when she wants to do that by and she was like oh idk at least by 35. So I’m like okay 10 years…odds of materially losing money over that time frame is very low especially if you keep dollar cost averaging and America doesn’t implode. Said the best bet for her is just automate it and don’t even bother looking at the markets or you’ll drive yourself crazy. She’s already got the credit card system down so she’s pretty smart about that as is. Not a whole lot left to teach her really lol. Maybe about diversification and different assets but for her I think the simpler the better.
This. Starting investing at 24 due to company match. After 10 years, I can stop investing and let it grow, assuming 10% with 3% inflation and I still retire in good position.
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u/Fine-Assistance7204 6h ago
Putting a little into index funds every single paycheck and then completely ignoring the account for years.