Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.
Here’s what: Losing out on thousands in retirement savings taught me a lesson I’ll never forget
I moved to the US from Canada 11 years ago and knew less than nothing about investing for retirement. I say less than nothing because my only knowledge of retirement came from my dad who, bless him, retired at 55 with a generous pension from a career in social services. Saving my own money now for retirement? Totally foreign concept.
At 24, I got hired into my first full-time American job at a company that offered a 401(k) with a 3% match. I asked my partner to explain this incomprehensible string of words and numbers: “They’ll take a percentage of your paycheck and put it in the stock market for retirement. And they’ll match whatever you put in up to 3%.”
I balked. They wanted me to put my money in the stock market for retirement?! This was absurd to me for two reasons: First, because of my expectations around earning a pension. And second, because I was positively petrified of the market.
My dad, who taught me most of what I knew back then about managing money, had invested in a few different ways over the years: He’d opened education savings plans for my brother and me when we were born, had a few life insurance policies, and had a spousal retirement savings plan for my mom, who was a full-time parent.
What he told me about the stock market, though, was very different: Avoid it at all costs. You will only lose money. And while that’s certainly not true across the board, graduating into the 2008/2009economy did nothing to change my view.
So when I learned what my shiny new 401(k) had in store for my hard-earned funds, I ignored it and contributed zero dollars. For years.
Around age 30, however, something shifted. I attended a conference for women in media where Sallie Krawcheck, founder of Ellevest, spoke about her company and the idea of ethical investing. She made it sound so simple: Start with a small sum, invest consistently in companies that align with your values, and over time, your investment will grow. I was sold.
I opened an Ellevest account and chose an “impact portfolio,” and started saving. I also put as much money as I could into a 401(k) the next time it was offered, and I haven’t looked back. And guess what? My investments have grown consistently every year since.
A quick Google search tells me that if I’d started saving 10% of my income at age 25, I’d have over $1 million at retirement. Start a decade later, though, and I would have just over $540,000. That’s a mind-boggling loss. But now that I know better, I’m doing better, and my goal is to increase my retirement savings percentage as the years go by so I can reach that glorious million-dollar number. And I think I can do it.
The most important lesson I’ve learned about investing in the last decade is just to start, whether you’re 23, 35, or even older. You don’t have to be rich, you don’t have to put thousands into the market every month, and you don’t have to invest in companies you don’t believe in. The data is clear: The market goes up over time, so as long as you’re patient and diligent, your wealth will grow right along with it.
— Stephanie Hallett, senior editor of Personal Finance Insider
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