Time is such a precious commodity. When investors squander it, it is a shame. But many investors waste resources that can never be recycled.
Time is the most precious ally of investors. As time goes by, the yield increases in geometric progression. As most of us have seen, it is almost magical.
As time goes by, the investment income grows exponentially, which is as close to magic as most of us see.
To understand the value of this factor, consider the case of a 20 year old young man who wanted to retire at the age of 60 with a million dollars. Assuming a yield of 8%, future millionaires in this category can achieve this goal by saving only $3574($68 per share) each year. For 40 years, they have only saved $142969. The balance will come from the account income.
These investors will use annual deposits and experience total deposits every day waiting for the start. The longer they wait, the more likely they are not to reach their goals.
Avoid these common mistakes and let time work for you.
Stealing retirement account
It is disappointing that many employees did not transfer their annuities and profits into sub accounts when they changed jobs, but took vacations and spent money on new cars. It is particularly important to maintain all retirement accounts at work. Although the amount seems relatively small, if the IRA accumulates the tax of the year, it will increase to a considerable amount. For example, if retirement is required, $10000, an increase of 8% in 30 years, is worth $100626.
Shooting leaflets
Some paranoid investors believe that as time goes on, a series of high-risk investments will be averaged, and today’s losses can be made up by tomorrow’s earnings. These serial losers bought incredible deals in order to gain huge profits. This gambler’s mentality has nothing to do with investment. It will not lead to anything but financial bankruptcy.
Centralized investment
All incomplete diversified product portfolios will expand risks without increasing expected returns. No investor can assume diversified risks. They cannot afford to lose all or most of their savings. The more concentrated the product portfolio, the more opportunities for terrible things to happen.(If you ask any employee of Enron, how much he likes his company’s stocks now.) Avoid holding industry funds, private stocks, and funds concentrated in warehouses.
In a sound investment strategy and continuous discipline, maintaining capital is as important as starting early. Blowing up your savings on the way will ruin your most valuable path to financial independence.
