How to Money by Jean Chatzky

Author:Jean Chatzky
Language: eng
Format: epub
Publisher: Roaring Brook Press

4. LATHER, RINSE, REPEAT

Keep doing what you’re doing! Once you buy a share or invest in a mutual fund, just keep adding dollars to feed the compounding machine. That’s how investment empires are built … and we’re not even exaggerating! (Don’t mind us … these are tears of joy. We’re dabbing our eyes because we love it when we’re present for the birth of a new investor!)

RETIREMENT, WHAT?

We get it. Retirement seems like a long way off. And for you, it is … But the sooner you think about it, the better. We already talked about the beauty of compound interest and how much your money grows over time … That’s why whenever you get a real job—meaning a full-time, “adult” job with benefits—you’ll want to open a retirement account.

When people talk about having a job with benefits, they mean two things: health benefits (health insurance, which we’ll talk about in Chapter 13, here) and retirement benefits, like a 401(k) account (which we talk about here).

But if your employer doesn’t offer a retirement account, or if you’re self-employed, don’t fret. You can open an IRA, an individual retirement account, through any brokerage firm. As soon as you have a part-time job with an actual paycheck (since you’ll need proper documentation of what you’ve earned), you can open an IRA or a Roth IRA. A Roth IRA is a type of IRA into which you can invest no more than $6,000 per year. Ideally, when you have an IRA, you’ll be investing money for your future that you won’t plan to touch until you turn sixty-five. But you can also pull that money out without penalty to buy your first house or pay for school if you need to.

Trust us—you’ll want to start investing for retirement as soon as you have the spare funds to do so. That money could make a big, big difference in your future. See here and here for calculations of what small amounts of money can be worth when invested over time.

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