Welcome to the Personal Finance Insider, a bi-weekly newsletter that connects you with the stories, strategies, and tips you need to get better at money.
Here’s what: Losing thousands of retirement savings taught me a lesson I will never forget
I moved to the US from Canada 11 years ago and knew less than nothing about investing for retirement. I say less than nothing because my only knowledge of retirement came from my father, who, bless him, retired at the age of 55 with a generous pension from a career in social services. Hide my own money now for retirement? Completely foreign concept.
As a 24-year-old, I was hired for my first full-time U.S. job in a company that offered a 401 (k) with a 3% match. I asked my partner to explain this incomprehensible series of words and numbers: “They take a percentage of your paycheck and put it on the stock market for retirement. And they match whatever you put up to 3%.”
I bent. They wanted me to put my money in stock market to retirement?! This was absurd to me for two reasons: First, because of my expectations about earning a pension. And secondly, because I was positively petrified of the market.
My dad, who taught me most of what I knew at the time about managing money, had invested in a few different ways over the years: He had opened up education savings plans for my brother and me when we were born, had a few life insurance policies, and had a spouse savings for my mother who was a full time parent.
However, what he told me about the stock market was very different: Avoid it at all costs. You will only lose money. And while that is certainly not true across the board, one is graduating to 2008/2009
the economy did nothing to change my view.
So when I learned what my shiny new 401 (k) had in store for my hard-earned funds, I ignored it and contributed zero dollars. For years.
Around the age of 30, however, something changed. I attended a conference for women in the media, where Sallie Krawcheck, founder of Ellevest, spoke about her business and the idea of ethical investing. She made it sound so simple: Start with a small sum, invest consistently in companies that match your values, and over time, your investment will grow. I was sold.
I opened an Ellevest account and chose an “impact portfolio” and started saving. I also put as much money as I could, in a 401 (k), the next time it was offered, and I have not looked back. And guess what? My investments have grown steadily every year since.
A quick Google search tells me that if I had started saving 10% of my income at age 25, I would have over $ 1 million by retirement. Starting out a decade later though, I wanted a little over $ 540,000. It’s an overwhelming loss. But now that I know better, I feel better, and my goal is to increase my retirement savings percentage as the years go by so I can reach the glorious million. And I think I can do it.
The most important lesson I have learned about investing in the last decade is just getting started, whether you are 23, 35 or even older. You do not have to be rich, you do not have to put thousands into the market every month, and you do not have to invest in companies you do not believe in. The data is clear: The market goes up over time, so as long as you are patient and diligent, your wealth will grow right along with it.
– Stephanie Hallett, Senior Editor of Personal Finance Insider
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