Saturday,
July 2, 2022
Top Story
The Week in Review
• Federal Reserve Chair Jerome Powell spoke at the European Central Bank’s annual conference. He admitted the Fed could end up going too far in its fight against inflation, implying a recession is possible. That said, Powell argued the greater risk lies in failing to achieve price stability.
• The PCE or personal consumption expenditures price index showed prices rose 0.6% in May. This is the Fed's preferred measure of inflation. The Commerce Department notes the PCE rose 6.3% year-over-year.
• Mortgage applications moved higher in the MBA’s weekly survey. The overall number grew by 0.7%. Demand for mortgages has been on the decline amid rising rates and the higher costs they bring.
For more economic news and how it affects your money, visit the SoFi app.
Why You Should Start Retirement Planning as Early as Possible
Typically, the earlier you start investing the better – even if you’re only saving a small amount. Typically, having a long time horizon means you have time to weather the ups and downs of the markets.
What’s more — and this is critical — the earlier you invest, the more time you’ll be able to take advantage of compound gains, the returns you earn on returns that help supercharge your ability to save. Compound gains are the reason small amounts of money saved and invested now can go further than much larger amounts of money saved later. The more time you have, the more returns compound gains can deliver.
Example: Imagine you are 25 with plans to retire at 65. That gives you 40 years to save. If you save $100 per month with an average annual return of 6% compounded monthly at age 60, you would have saved about $200,244
Now, let’s imagine (as a hypothetical example) that you waited for 30 years, until age 55 to start saving. You put $1,000 a month into your retirement account. With an average annual return of 6% compounding monthly, you’d only have about $165,698 by the time you’re ready to retire — far less than if you’d started saving smaller amounts earlier.
The lesson? The longer you wait to start saving for retirement, the more money you’ll have to save later to make up the difference. Depending on your financial situation, it could be difficult to find these extra funds when you’re older.
Even if you don’t have a lot of room in your budget to start investing, putting away what you can as early as you can, can go a long way toward saving for retirement. As you start to earn more money, you can increase the amount of money that you’re saving over time.
If you’re ready to learn more and open a traditional or Roth IRA account, get started by opening a brokerage account on the SoFi Invest® platform. You can open an account and get started in less than five minutes.
