We all know that it’s possible for professional and savvy traders to invest their way to $1 million and beyond, but can the average person actually do it?
Yes! That’s according to Karen Eley, of Women Talking Finance and here’s how.
If you look at the following table which is broken into ages and the amounts needed to invest on a regular basis, it shows what’s needed to hit that golden glow of $1-million dollars.
The table assumes that the investments are being made into assets that achieve either a 3% or 5% return per year.
To hit this $1 million mark, you need to be investing the sum daily in order to get the benefits of that monthly compound interest.
Some people might prefer to invest this amount, if they can afford it, in a lump sum monthly.
The interest rate is reasonably achievable but is not without risk because as we know with all investing, some years are better than others.
While shares have risen over the last two weeks and are up about 10% for the year to date (looking at the ASX 200) the risk of a further correction remains because of global factors, much of which relate to rising debt levels and the Coronavirus.
Eley believes women have a tendency to be overly fearful about investing and it can hold them back. She also cites an element of perfectionism as a reason why some women never feel quite ready.
“We never feel like we’re quite ‘ready’, so either put it off or go small.
However putting things off, especially if you are eyeballing that $1 million mark, will cost you dearly as the earlier you start investing, the more compound interest you’ll accumulate.
Here’s 10 things women often say to themselves
- I don’t have enough to start (hey, you can start with as low as $5);
- I don’t know what I’m doing
- I have other priorities and responsibilities (typically mothers fall here)
- Someone I know lost a lot of money in shares, so I could as well;
- It’s definitely something I’ll do LATER
- It’s too complicated
- Investing in property is safer than shares
- Other hurdles: – its complicated, intimidating, marketing communicated to men rather than women
“The reality is that saving alone is not enough to even keep pace with inflation, so if you’re not investing, you’re likely losing money, says Eley.
How to get started and overcome the need for perfection and certainty.
1. Face your fears – write them out
2. Shut Up (switch off) Your Inner Critic
3. Write down everything your perfectionism is costing you (lost opportunities, time for other more important things, financial progress or success). Now future pace it, and ask, if I continue with this pattern, where will I be 5 years from now?”
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