Investing Odds And Ends: The Way Lunch Money Can Help To Save Your Retirement Plans
It amazes me how many people who complain that they dont have adequate money to retire with, but, continue to spend some money weekly hoping this week could be the week to win huge simply by winning the lotto. When chances of winning the Powerball lotto is approximately one in 80 , 000 , 000, the odds are not to your advantage.
Why don’t we put it this way, if you pay out $10 per week playing your favourite lotto, and can receive 6.5% annually, over twenty five years, you would have slightly below $31 000.
Should you also purchase your lunch every day, think about putting those funds aside also. At an average of $10 each day + $10 for the lotto, if you put those funds away, you’ll have $185 360 at the end of twenty five years.
Think it over – you could add $185 000 in your retirement in twenty five years simply by bagging a lunch each day, and not playing the lotto. Amazing how much $60 per week will get you.
So now, suppose you can get 9% buying superior stocks? (since 1900 – this year, the average return is 9.4%)
Would you believe taking a lunch to your workplace and not playing the lotto can make you $286 771 richer in twenty five years if the equity market returns an average of 9% each year? A quarter of a million dollars.
Therefore think about that the next time you place your lunch order!
How could you make 9% or greater? You could consider small cap stocks since ideally, this new found bundle of money signifies a small percentage of your overall net worth. Since that money was going to be frettered away buying lunches and lotto tickets – you can afford to be a little more aggressive using your money – however, that’s not to propose you should risk it – only that you can afford to take on a little bit more risk. A prudent approach would be to take 5% of your new found riches and buy penny stocks.
The kinds of small caps to buy and sell will not be the types which have very low volume and very little concerning sales. Find companies that trade at least 250 000 shares every day, have a rate of growth that is at least 20% and really should be profitable. It might take a little bit of time for you to locate them, however , these jewels put the probability of success to your advantage – you might also want to find stocks that are trading at their 52 week high – as these stocks usually continue moving higher.
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