January 07, 2004
Want a foolproof way to turn $1 a day into $67,815?
It’s not just pocket change anymore. MSN Money points the way to a nice 30-year nest egg. Not necessarily a new or ground breaking approach, but it is quite solid.
Want a foolproof way to turn $1 a day into $67,815? It doesn’t take a lot of money or time or personal sacrifice. There’s no magic, no multilevel marketing and no salesman will call at your door.
In fact, it’s the simplest and most-proven way to get richer, and if you extend this concept to other parts of your life, you could end up with an enviable retirement nest egg.
To start, all you have to do is take your pocket change at the end of the day and drop it in a jar. If you can do that, and you put away about $1 a day, that’s just $7 a week. At the end of the month, you’ll have about $30.
Since this is money in your pocket, you’ve already paid taxes on it in the form of withholding from your paycheck. (If you’re self-employed, that’s not true, but we’ll ignore that to keep things simple.) Every month, deposit your savings in a Roth IRA account, where it can grow tax-free and — more important — be withdrawn tax-free in the future.
What’s a paltry $30 a month going to do for you? Growing tax-free for 30 years, with a 10% annual return, your investment account will be worth $67,815. (Stocks overall have returned an average of more than 10% a year since 1926, so buying a broad-based stock index fund the Vanguard Total Market Index Fund ( VTSMX ) is the easiest way to capture that kind of growth.)
Not bad for pocket change, but that’s just the beginning.
Well, let’s all get Roth IRA accounts!
Posted by akvalley at January 7, 2004 01:37 PM | TrackBack