When you’re in your 20s, you’re probably just starting out in your first job and concerned with making a good impression. Even if you might still be living with your parents, buying a new wardrobe, going out to fit into your new environment, enjoying your independence will become paramount concerns, rightly or wrongly.
In your 30s, you are most likely raising a family, saving for your children’s education, taking out a home mortgage, paying for your first or second car, and some of you might be taking care of an aging parent.
If you are in the 40-something age group, you might have bigger salaries and bonuses, but will be dealing with health issues too and higher cost of living. At what point do you seriously start thinking about investing for retirement and how much do you set aside? With all these financial concerns at the back of your mind, it’s no surprise that retirement will be taking a backseat.
I read a rule of thumb in The Asian Wall Street Journal’s Lifetime Guide To Money (Dow Jones & Co., Inc.,) that to figure out how much to invest in the long haul, you should subtract your age from 100 and add a percentage sign.
Using that rule, I’m under-investing and spending too much on current concerns! That is, unless I count the money hubby and I are putting into our home.
How about you?
October 31st, 2008 at 9:35 pm
pls, help,…i did start investing 4 my retirement at 40,7 years ago…I’m 47 years old at present,…
September 6th, 2008 at 12:01 am
Hi Salve!
THanks for the explanation. ^^ I get it now ^^
September 5th, 2008 at 6:54 pm
@Sunjun, Rick and the rest: as with rules of thumb, this is a loose statement and is certainly not gospel. When we say investing for the long haul, that means aggressive investing and therefore should be concerned more about growth than stability. If you’re now 30, that means you invest 70% (roughly) of your investment funds for the long haul–maybe in stocks if your risk profile shows you have the capacity to handle that kind of risk, or in stock funds and other investments for long-term growth. The remaining 30% of your portfolio should be in more conservative investments for diversification. Thank you for the chance to clarify things
September 5th, 2008 at 6:53 pm
@audrys, I definitely agree with ACN. Raising kids and thinking about their education and living in this day and age of spiraling prices AND thinking about retirement can be really tough! But you sure showed determination to do it, and i wish you all the luck and the patience :). Great work on the planning part.
September 5th, 2008 at 6:52 pm
@hvrds, thank you that is very informative. Finding 15% to 20% overall return is tough! Any tips?