Save EARLY and Save OFTEN

It’s very rare to meet someone who regrets saving early for retirement, but unfortunately the alternative seems all too common in our world today.
TFO Phoenix Chief Operating Officer, Brittany Genzale says that if she could travel back in time, she would encourage her teenage self to start saving in a Roth IRA as soon as she got her first job. She states, “Even if the contribution feels tiny, it teaches you to think about the future and have discipline. Decades later, your account may seem small relative to what you might be able to save and invest at that time, but you will look at your first account with fondness and be proud of your younger self for being so thoughtful.” Developing good saving habits early and taking advantage of the powerful impact of compounding can make for greater financial security in the future.

Take a simple hypothetical case study: When Alexis turned 16, she got her first job earning $10 per hour. Because of school she could only work 8 to 10 hours per week. On average her take home pay was $400 per month. She decided to set aside $50 of her monthly paycheck to invest in a Roth IRA. For the next 10 years, even through college, she invested $600 annually.

Without having made any additional contributions after age 25, earning an annual return of 6%, the $6,000 that she had invested over the 10-year period would grow to over $76,000 when she turned 65.

The secret ingredient is “time” which allows your investment earnings to compound. Morgan Housel, author of “The Psychology of Money”, compares the power of compounding to the effects of the ice age. He states: “…you don’t need tremendous force to create tremendous results.” He illustrates this important concept further by providing some insight on Warren Buffet’s success. While Warren Buffet is skillful at investing, Housel points out that there are other investors that have achieved greater investment returns but have not amassed the fortune of Buffet. While making smart investments is important, a significant portion of Buffet’s wealth can be attributed to the fact that he has been investing for three-quarters of a century, having started investing at the age of 10.

You may not have started at age 10 and setting aside hard-earned money today may feel like a big sacrifice, but the rewards of starting early can be exponential. And as Brittany mentioned, you may feel a sense of pride for being so disciplined.

To sum it up, TFO Phoenix advisor Connor Humphrey says it best, “Yesterday was the best time to start saving and investing. You will always be tempted to put it off as long as possible. Instead of doing that, invest in your future today. ‘Future You’ will be grateful that the ‘Younger You’ did!”

Disclosures

Please contact your Investment Adviser should you have any questions regarding the information provided herein.

This document is educational only. The information provided herein is general in nature. It should not be construed as legal or tax advice, and should not be considered an individualized recommendation or personalized investment advice. Laws may change pursuant to the administration’s legislative agenda. TFO Phoenix, Inc. is not engaged in the practice of law. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

TFO Phoenix, Inc. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.

This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of TFO Phoenix, Inc. or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.
All returns illustrated assume the reinvestment of any interest and dividends.

Past performance is not indicative of future results. All projections, scenarios, and forecasts are based on assumptions that may not come to pass. All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. There are no assurances that an investor’s portfolio will match or outperform any particular benchmark. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of an investor’s portfolio.

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