April 15 is the last day to contribute to your retirement account for 2015, so I thought I’d talk about this book, which is a reference published in 2014. Although the book covers various retirement plans, the information is applicable to those who want to save money in general because it discusses various investment products. This is a must read for those earning any amount of money. You don’t have to earn over $5,000/year to get started with a basic IRA.
The book is easy to read and follow and in the end, sums up 36 take-aways. I won’t list them all, but I highlight six that might make you pause and consider looking at your financial condition and see how you can save some money for your later years. The earlier you start, the more money you can look forward to. You can start as early as 18.
As presented in the book, pp. 255-258, here are my top six take-aways:
- You can accumulate wealth even if the stock market is falling.
- Many employers offer free money to employees who save for retirement at work. If your employer is among them, make sure you do whatever you can to get your share of that free money—and if your employer isn’t so generous, consider changing jobs.
- To guesstimate how much money you’ll need when you enter retirement, add a zero to the annual income you’ll want in retirement and then double that figure. The result is a good indication of the amount you’ll need in total savings and investments when you first retire.
- Your goal is to contribute as much of your pay to your retirement plan as you are allowed to on a pre-tax basis. If that’s not possible, just contribute as much as you can—even if all you can manage is $10.
- Never borrow from your retirement plan.
- Don’t invest emotionally. Too often, this causes people to incur massive financial losses.
I’ve listed below two classics for some additional reading.
– The Intelligent Investor by Benjamin Graham
– Street Smart Investing, A Price-Value Approach to Stock Market Profits by George B. Clairmont & Kiril Sokoloff
Granted, they tend to get a little dry. But remember, you are your own best advocate for your cash and countless others will want a piece of your money. If that sounds cynical, it is not meant to be; it just means that you must rely on yourself to understand where your money is being invested and if it is working in the way you want it to. One other reading suggestion that may lead to additional reading is an online article called The Rise of the Robo-Advisor—Should You Use One? (source: Investorjunkie.com).
One last take-away (part of the 36): “Unlike many members of prior generations, you can’t assume that your employer or the government will provide you with all the income you’ll need in retirement. You must save for your retirement yourself.”