This post is for those who aren’t investing regularly for their retirement yet. Not just saving, investing. In order to retire right, you’re gonna have to beat inflation. That means no savings accounts! I wrote previously about IRA Options For Those Starting Out, with various options for those who with limited funds.
How this? In addition to TIAA-CREF which was already mentioned, T. Rowe Price will let you open an account and invest in their funds for only $50 a month if you sign up for their Automatic Asset Builder program. There may be a $10 annual low balance fee, but don’t let ten bucks stand in your way. Start! Here’s a little secret: $50 a month is nothing.
Especially when it is on auto-transfer. I automatically move $50 a month from my chekcing account to a Fidelity 529 account to waive the fees for my MBNA 529 Card, and I don’t even notice it anymore. I’m always amazed when I check my balance and see how fast it has grown.
Don’t think you have $50 a month? $50 is a dinner for two and movie tickets. $50 a month is $1.67 a day. Heck, I’m sure you could easily clear that much just by participating in the occasional deal.
$50 a month, invested at 8% annually for 30 years, is $71,000.
As for investment suggestions, if you have a long-term horizon one possible option is the Total Equity Market Index Fund (POMIX), which tracks the entire U.S. Market, from small-cap to large-cap. The expense ratio is a reasonable 0.40%.
Another option is their auto-pilot funds, such at the Retirement 2040 Fund (TRRDX) which automatic adjust as you reach your target retirement year, and has an expense ratio of 0.84%. A bit high for my tastes, but still below average. Remember, for $600 a even a 1% expense ratio is just six bucks a year. They also have some actively-managed funds with good track records, if that’s your bag.
1) You can start investing in quality index funds with just $50 a month.
2) You can manage $50 a month.
3) After you start, it becomes more and more painless.