You know the scenario, it’s payday and before you know it bills are paid and you’ve already planned three dinners out with friends. Your budget is wiped out and you did not add to your savings. One of the best methods to ensure that you are hitting your savings goals is to pay yourself first.If you treat yourself and your savings as if they are a bill, you can ensure that each and every month you are adding to your nest egg. Another way to bump up your savings is to use technology to your advantage and make your monthly savings an automatic transfer.
If you are curious about how long it would take to double your money, there is a helpful rule of thumb that will give you a quick way to figure that out. The Rule of 72 states that if you divide 72 by the amount of interest/gain that you are receiving you will determine how many years it will take to double your money. As an example, if you have $5,000 saved/invested and are making 4%, take 72/4 and that tells you that it will take 18 years for you to reach $10,000. This is the concept of compounding. The more return you make the faster your money will grow BUT if you follow tip #1 you can accomplish your goals all the faster.
It is easy to get buried in historical returns as well as predictions of the future. More often than not, you will not hit a home run on a stock pick and have a windfall. Keeping focused on consistent saving and investing for the long-term is the secret to investing success. This strategy takes emotion out the equation. You never sell too soon or buy too late. Keeping a long-term perspective focuses you on what really matters – the achievement of your goals. As an added benefit, long-term investment usually reduces both taxes and fees. Keep your eye on the prize!