Millennials: Don't Let An Oversized Rainy Day Fund Keep You From Investing
It may be prudent to save up just in case you run into a tough 6 months, but it's also smart to start investing for the long term as soon as possible.
Here's a story I've heard told in many variations over the past few years. In one, there are twin brothers -- let's call them Charles and George -- who each get jobs at 22 at the same company for the same salary. They are immediately faced with the decision of whether or not to start tossing money into their retirement funds. Charles elects to make a 5% salary contribution to his 401k. George elects to stick all his extra cash in a rainy day savings account in case things go awry.
Ten years later, George realizes he's way behind on his retirement and starts contributing the same 5% as Charles. When the brothers reach retirement age, Charles has been contributing to his 401k for roughly 40 years, George for about thirty. That ten-year gap doesn't seem like much on the surface but because of the way compounding interest works, Charles will have saved over twice as much money as his brother.
The moral of this story, aside from teaching a way to show up your brother, is that young people need to take advantage of the distance in years between the present and the point in the future at which you'll need to start drawing from your retirement account. It may feel prudent to amass a weighty rainy day fund lest you lose your job at 25 but the long-term cost of that prudence could be the difference between living comfortably and living uncomfortably when 2055 roles around.
The importance of saving for the long term versus saving for the short term is one of several tips offered up by Forbes contributor Alexandra Talty in a piece up on that site right now. Be sure to check it out if you're a fellow millennial in need of a rough crash course on savings and investments. Let us know in the comments if you have a different take on the issue.
Read more at Forbes
Photo credit: Andrey_Popov / Shutterstock
For more on millennial issues, check out the following video featuring Pew Research's Paul Taylor:
Antimicrobial resistance is growing worldwide, rendering many "work horse" medicines ineffective. Without intervention, drug-resistant pathogens could lead to millions of deaths by 2050. Thankfully, companies like Pfizer are taking action.
- Antimicrobial-resistant pathogens are one of the largest threats to global health today.
- As we get older, our immune systems age, increasing our risk of life threatening infections. Without reliable antibiotics, life expectancy could decline for the first time in modern history.
- If antibiotics become ineffective, common infections could result in hospitalization or even death. Life-saving interventions like cancer treatments and organ transplantation would become more difficult, more often resulting in death. Routine procedures would become hard to perform.
- Without intervention, resistant pathogens could result in 10 million annual deaths by 2050.
- By taking a multi-faceted approach—inclusive of adherence to good stewardship, surveillance and responsible manufacturing practices, as well as an emphasis on prevention and treatment—companies like Pfizer are fighting to help curb the spread.
Entrepreneur and author Andrew Horn shares his rules for becoming an assured conversationalist.
- To avoid basing action on external validation, you need to find your "authentic voice" and use it.
- Finding your voice requires asking the right questions of yourself.
- There are 3-5 questions that you would generally want to ask people you are talking to.
Sarco assisted suicide pods come in three different styles, and allow you to die quickly and painlessly. They're even quite beautiful to look at.
Death: it happens to everyone (except, apparently, Keanu Reeves). But while the impoverished and lower-class people of the world die in the same ol' ways—cancer, heart disease, and so forth—the upper classes can choose hip and cool new ways to die. Now, there's an assisted-suicide pod so chic and so stylin' that peeps (young people still say peeps, right?) are calling it the "Tesla" of death... it's called... the Sarco!
Swiss researchers identify new dangers of modern cocaine.
- Cocaine cut with anti-worming adulterant levamisole may cause brain damage.
- Levamisole can thin out the prefrontal cortex and affect cognitive skills.
- Government health programs should encourage testing of cocaine for purity.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.