Under Twenty-Five and Investing: Why You Need to Start Now
July 21, 2008
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RELATED TICKERS: MSY
We’ve all been there before…we see news about pension funds and 401(k)s, and we either change the channel or go to the next page. It’s really easy to say: “I don’t need to worry about that yet, that’s for when I want to have kids and I’ve chosen a career!”. The fact of the matter is, most of us can’t imagine taking money we’re earning right now and saving it for something 40 years down the road. I mean, we have rent to pay, and every dollar that I have to lock up in a retirement account is one more dollar that I don’t get to enjoy right now. So why should I even bother?
It’s All About How You Look at It
Most authors, when they talk about saving for retirement, say things like “if you saved $1,000 today, if it returned 10% every year, in 40 years you’d have $45,259.26!”. Although that’s an impressive number, that’s most of your life you’d have to wait to enjoy that money. Plus, if you’re earning between $15,000-20,000 a year, that’s a pretty significant chunk of your yearly income that you’d have to sacrifice. I mean, that’s a couple months rent depending on where you live, or a nice TV.
So instead of thinking about the initial investment and the end result, instead think of it in a different way: the amount your salary would go up per year.
For the sake of discussion, let’s say you only invested in the Morgan Stanley High Yield Fund (NYSE: MSY), a closed-end fund traded on the New York Stock Exchange and managed by the investment bank Morgan Stanley.........
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