Invest Early and Retire a Millionaire: financial expert Suze Orman Advises Gen Z
Unlike Gen X and baby boomers, time is on the side of millennial and gen z workers. By taking advantage of time and saving early, these young workers have significant potential to retire as millionaires. With years ahead of them, renowned financial expert, Suze Orman advises that investing early means that they can watch their wealth grow. In an interview with Moneywise, she mentioned that a delay of just ten years could cost them $700,000.
Compound Growth is Key
Orman believes the compounding interest on investments is of the utmost importance. She highlights how powerful compound growth is, saying that just a small investment of $100 every month from ages 25 to 65 into the likes of a Roth individual retirement account (IRA) could mature into a million dollars with a 12% average annual rate of return. A person would net approximately $1,188,342 in 40 years’ time if they deposited a monthly investment of $100 into an account with a 12% yield. But the catch here is that the investment journey should not be delayed. A millennial who is just 5 years older when they start their investment journey at 30 would accumulate approximately $649,626 by 65 years old, which is only half of the amount a Gen Z worker could accumulate.
Get a Head Start and Let Your Money Work For You
Investing in your future self is crucial to grasping the concept of compound growth and building wealth. Orman insists that taking advantage of employer-sponsored savings vehicles like 401(k)s and IRAs, which offer tax benefits and potential employer matches, is essential for the younger generation. Exploring investing apps that require minimal initial investment is also recommended, as starting early and making monthly contributions could make a world of difference. If a young worker commits to the process month by month and does it for an extended period of time, they could accumulate an astronomical amount of money.
12% Return Could Be Conservative
According to Orman, the average annual rate of return of 12% is conservative, and young workers can expect up to a 25% rate of return on their investments. Consequently, investing early and allowing time to work in their favor is crucial to building wealth, and the younger generation must take note.