Please read and share with anyone you know in their 20’s
- Whatever you have properly invested by age of 30 will likely grow to 16 times itself by age 66.
- Whatever you have properly invested by age 39 will likely grow to 8 times itself by age 66.
- Whatever you have properly invested by age 48 will likely grow to 4 times itself by age 66.
- Whatever you have properly invested by age 57 will likely double itself by your retirement age.
Virtually every client I have ever worked with says “I wish I would have saved more in my 20’s before life got in the way.”
The Lesson: Get as much as possible invested by age 30…..biggest bang for my retirement buck!
I call this asset The Third Decade and only people 20-30 years of age have it. Not using The Rule of 16 is like burning money….you can’t ever get it back. You will have to save a lot more to get the same result.
Here a corollary to the Rule of 16. “60k by 30”. This simply says that if you can somehow get 60k invested by age 30, you will likely have 1 million dollars at age 66… even if you never saved again! Who knows what 1 million will be worth then….but it is still a lot of money and a great core for a retirement plan.
How hard is it to get 60k by age 30? Well, here are 2 fairly easy ways.
- Save 5k per year into a Roth IRA for 9 years.
- Save 400/ month into your companies 401k…they may even help you with some matching.
(Some parents can be persuaded to help these early savings)
There is another big reason to really max out your savings while in your 20’s. Not only does all that invested money likely turn into 1 million dollars at retirement (Rule of 16) but it is around age 30 when expenses like marriage, house, children, etc. start growing. Your early savings will have greatly relieved the ultimate pressure of retirement savings. And imagine if you marry someone else who met the 60k by 30 rule?
Bottom line….there is a lot you can do with a dollar during your Third Decade, but nothing that gives you the impact of the Rule of 16.
We challenge you to live frugally in your 20’s so you can set you and your family up with a powerful financial foundation for the rest of your life.
Note: All investment projections assume a fully diversified stock portfolio that averages 8.2%.