A Smart Savings Plan Might Beat Lottery Odds
Now that we have a baby girl, we can no longer put our finances in the fate of luck. Although, playing the lottery can be fun, we don't want to put ourselves in danger of missing out on a solid financial future for our family. Thinking smart about our money helps in the long game.
Never let your future fall into the hands of fate, learn how to manifest your own retirement plan with the help of qualified financial advisors.
Have you ever daydreamed about winning the lottery? What would you do if you won? Quit your job? Travel the world? Put money away for retirement? While it is fun to dream about what you would do with lottery winnings, it is not the best strategy to establish a viable plan for funding your retirement years.
Unfortunately, not all Americans agree. In fact, 21 percent of respondents to a Consumer Federation of America survey believe their best bet for building retirement wealth is playing the lottery. In reality, you are twice as likely to be struck by lighting while reading this blog post than you are to win a Powerball jackpot. The chance of winning the top prize in a Powerball lottery is 1 in 146 million. Those odds are staggering and a feat few will ever experience!
How small sums grow
What some lottery players do not realize is that if they would allocate a small amount of money each week into an interest-earning savings account or investment vehicle, their odds are far better for having a retirement nest egg.
Thanks to the potential of compounding, even small sums can add up if given enough time. Compounding is a process by which the value of an investment can increase exponentially due to a recurring interest and dividends received. Keep in mind that an investment, unless a fixed product, does not guarantee a profit and will fluctuate in value.
With compounding, you can earn interest on your beginning principal and on the interest you earn each following year. Hypothetically, if you earned 5 percent interest on $1,000 in your retirement account, you would have $1,050 at the end of the year. The next year, you may again earn 5 percent – but this time on $1,050 instead of $1,000, so you’d end up with $1,102.50. The following year you could potentially earn interest on $1,102.50, and so on. (These hypothetical rates of return are for illustrative purposes only and are not meant to represent the past or future returns of any specific investments or investment strategy, or to imply any guaranteed rate of return but they do illustrate some of the benefits of securing your money in a companding account.)
Less is more
The beauty of retirement planning means you can work towards and invest to reach your ultimate goals. You should begin investing early if you can, however; it is never too late to start saving for retirement because every little bit helps.
Choose the option that is best for you
The types of investments which you choose to fund your retirement portfolio can affect your ability to benefit from compounding. You may choose to put your money in various financial vehicles with varying strategies, such as an investment portfolio, certificate of deposit, or even a savings account. Your choice depends on a number of different factors, including your risk tolerance, your current financial situation, and your time span until retirement.
Get Started Today
If you have not started contributing money toward a retirement fund, it is never too late to get the ball rolling. By beginning the investment journey now, you may not need to depend on the lottery for your retirement. A qualified financial advisor can help you work out the details of your financial life, including showing you your retirement income projections and possible effects of inflation on your investments. An advisor also can explain various investment risks, help you select specific investments, and map out a long-term strategy to best meet your retirement goals.
Stop playing with chance and relying on luck to secure your future. Get started now by scheduling a time to chat with an Atlanta-based wealth management firm who will put your interests first and make your retirement planning their priority, Benedetti, Gucer & Associates.
The views expressed represent the opinions of Benedetti, Gucer & Associates and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.
Additional information, including management fees and expenses, is provided on Benedetti, Gucer & Associates’ Form ADV Part 2, which is available upon request.
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