Pic : Stylegator
As we all try to get our life together after finishing college or school and officially start "adulting", it's hard to get on top of your finances! We have all been there....
It is so easy to take out loans and credit cards now but if there is one thing that we can do that will benefit us greatly in the long run is to start investing in a retirement fund ... i know this is the last thing you want to think about when you are young but most employers take care of it for you its just a matter of signing up to their employee pension scheme the best part is its tax efficient so your take home pay is not taxed on the amount you chose to invest and also most employers will add additional contributions on top of your own (so why say no to free money)! In fact there are triple tax saving benefits:
1. Your take home pay is taxed after the amount you decide to contribute from your salary is taken out for you pension so you pay less income tax on your salary.
2. While your money is invested in a pension fund you don't get taxed as would if it was sitting in a normal banks savings account your money is charged (DIRT). In fact you benefit from investing and earning compound interest over the long run!
3. You get a tax free Lump sum on retirement!
The great thing is the pension fund is invested to a portfolio of different asset classes to suit your risk profile and you will get the benefit of compound interest accruing over time - that is earning interest on top of interest for a number of years to significantly increase your lump sum on retirement.
This is particularly important for women, to lower the investing gap!
There are a number of reasons:
Firstly statistics show that women get paid far less on average to men, and women also have far less to show in their pension fund come retirement compared to their male counterparts which is a serious issue today as women tend to live longer than men and still need it to be able continue to support their lifestyle. Another thing to consider is women tend to have more buying power in most households women are the ones buying the household supplies, clothes, groceries etc. So we need to be making our money work for us and taking these steps sooner rather than later.
CNBC published an article showing the breakdown if you started investing in your 20's and put about $500 a month ($15- $17 a day) into an investment fund with the average annual return of 6% then you would be a Millionaire by the time you retire!
If you start saving at age 25
With a 4 percent rate of return: $628,918 With a 6 percent rate of return: $1,055,703 With an 8 percent rate of return: $1,825,461
If you start saving at age 30
With a 4 percent rate of return: $490,213 With a 6 percent rate of return: $763,609 With an 8 percent rate of return: $1,218,422
If you start saving at age 40
With a 4 percent rate of return: $282,505 With a 6 percent rate of return: $382,235 With an 8 percent rate of return: $524,105
As you can see the earlier you can start investing for your future the better! Lets lower the investing gap for women and it's never too late to start but every day you wait could actually be costing you money.