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Colin OShea

February 27 , 2017

Investment Basics: Saving Savvy

Saving Savvy

Have you checked out the latest smartphone? Are you willing to spend thousands of dollars for it? Probably not. But that’s how much it could actually cost you in the long run because you won’t have the money you’ve spent on your purchase to invest.

 

Sure, it’s tempting to have the latest high-tech device or high-fashion accessory now. But resisting temptation and saving that money in your retirement plan instead could improve the quality of your life in the future.

 

Dwindling Dollars

 

Each dollar you spend now is a dollar you won’t have to spend in the future. And you’re probably going to need that money. With retirees living longer and more active lives, you may need to fund a retirement that lasts a long time. Then there’s inflation to worry about. The prices of the things you buy regularly are likely to go up, and certain expenses, such as health care, may increase at a rate faster than inflation. If, like many people, you feel you have some catching up to do with your retirement savings, reducing your spending on nonessential items and saving the money instead makes good sense.

 

Growth Potential

 

The dollars you save for retirement instead of spending have the potential to grow in your plan account. Over time, even small amounts of money can increase significantly due to the power of compounded investment earnings. When the money you’ve contributed to your plan generates investment earnings, those earnings are added to your balance and reinvested. You then have the potential to earn a return on your contributions and your earnings. As the compounding process repeats itself, you have a larger and larger pool of money invested.

 

While you may not always have the latest and greatest high-tech device or this season’s most fashionable look, being saving savvy is a smart move that can help you have a brighter future.

 

Your situation is unique, so be sure to consult a professional before taking action.

 

Spending vs. Investing

 

Consider what might happen if you didn’t spend money on the items below and you invested that money in your plan account instead.

 

If you don’t buy:            You could have this much after:          

                   

 

10 years

20 years

30 years

40 years

$210 designer sunglasses

$382

$695

$1,265

$2,301

$750 computer tablet

$1,365

$2,483

$4,517

$8,218

$1,000 plasma TV

$1,819

$3,310

$6,023

$10,957

Source: DST

 

The prices shown are hypothetical. This is a hypothetical example used for illustrative purposes only. It does not represent the results of any investment plan in any fund or portfolio. Monthly compounding and an average annual total return of 6% are assumed. Your investment results will be different. Tax-deferred amounts accumulated in the plan are taxable on withdrawal, unless they represent qualified Roth distributions.

 

If you have any questions on the above article, contact the Security National Bank Wealth Management team by clicking below. 

 

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