I’m stuck somewhere in the middle of a Robert Kiyosaki and traditional investing mindset. While I definitely care about retirement and want to do my part in making sure that my retirement is a good one, I am not all gung-ho on only going the stock market route.
I want some physical assets – like real estate and businesses.
So I’m always torn. Do I put as much money as I can into a retirement account or do I stick to saving for real estate investments? Ideally, I’d like to meet in the middle.
While this post isn’t so much about my philosophies on retirement I do think it’s important to note that there is definitely more than one way to achieve that end goal.
For now, I’ve delayed the real estate investment goal in favor of saving for a down payment. But in the meantime I’m also implementing a totally painless way to save more for retirement.
The No-Brainer Way to Save More for Retirement
Ready for it?
Slowly increase your savings percentages each year!
Those increases don’t have to be huge (or can be if you’re starting from humble beginnings like I am) they just have to be.
I started 2014 out by purchasing individual stocks. A couple months in I got brave and decided to put a couple hundred dollars in some medical marijuana penny stocks. (Because that was going to be the next big thing, right?) Big mistake.
Those suckers tanked.
My couple hundred is now worth about $40. Lesson learned.
After that I started buying dividend stocks. Out of the five stocks I bought only one of them has increased in value. Apparently, buying individual stocks isn’t my thing.
Fast forward a few more months and I decided to let Betterment do my investing for me. Their results have been much better! (Nothing amazing but I’ve earned money instead of lost money.)
I opened up an account with $50 and put an automatic deposit of $100 a month. Not a whole lot, but those small amount DO add up.
Realizing that $100 isn’t a whole heck of a lot I wanted to increase my contributions but since I’m dedicated to saving for a down payment (and not totally convinced that I want ALL of my retirement dependent on the stock market) I decided to increase my contributions by 20 percent. That’s only $20 a month.
I’m not going to miss that amount of money.
To make the deal even sweeter one of my clients is also contributing $100 a month. So in total I now have $220 a month going to retirement.
Let Those Small Amounts Add Up
Increasing your percentages, even by a small amount, really does add up over time. Who knows, maybe in a few months I’ll up that percentage again. When it’s done in such small increments I don’t even notice it!
If you’ve been holding off opening up a retirement account because you don’t think you have enough money to do so then I encourage you to give Betterment a try. (That is my affiliate link and I only mention Betterment because until I found them I wasn’t aware I could start saving for retirement with only $50. They have no minimums!)
All you do is open an account of your choice, fill out a few questions so they can determine your investing profile (mine’s 90 percent stocks ten percent bonds) deposit some money (any amount you choose, there’s seriously no minimums), and they’ll invest your money in ETFs. (ETFs are exchange trade funds. They’re a diversified basket of assets, like mutual funds, but can be traded like stocks.)
You can even set a goal and then they’ll tell you how much you need to deposit on a monthly basis to reach it. As you can see, I’m way off track right now! (My goal is $400,000 by age 50.)
Bottom Line
It really makes no difference at all where you save your money as long as you save your money! You can save more for virtually anything by slowly increasing the amount you save.
You’re not going to notice an extra $5 a month leaving your bank account but when you add another $5 and another $5 and so on, you’ll start to see some amazing progress in your savings or retirement account without ever breaking a sweat!
Do you increase your savings percentages each year?
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Thanks for this post. I am going to check into this. Sometimes I feel that when I do my research on investing I get more confused and more discouraged. I want simple and understandable if that makes sense. I am not worrying (right now) about maxing accounts and other stuff I just want to start with something simple and this makes sense. Have a great weekend.
Yeah I went the whole complicated route at the beginning of last year. There’s a huge learning curve! In the end I decided that keeping it simple was the best thing. And I truly think it is. When I decided to do simple I didn’t lose all my money! 🙂
If its your dream to own real estate I think you should go for it. One of my goals is to become a bonafide landlord again, so I have made goals towards that.
Yes, definitely! Real estate is what gets me excited lol. I definitely want that to be a part of my retirement plan. And good luck to you on your real estate goal as well.
You are absolutely right! My 401k is set up on an auto increase each year. Baby steps Make all the difference.
Definitely! Those baby steps can add up to amazing results!
I have been using Betterment for the past year due to the low minimum amount I can contribute each month! I also like that I can create different goals, so I have a Roth IRA, Traditional IRA and an Emergency Fund. Plus they make their website sooooo easy to understand!
I like the goal feature too. I have set up a few different goals with them I just haven’t funded any of them except the retirement portion.
HI! I am new to your blog, but I really am enjoying what I am finding here. I see from several older posts that you love to read a lot of Personal Finance books and blogs. I was just curious, what your take on some of the big name Personal Fiances people out there have to say about money such as Dave Ramsey and Suzy Orman specifically when it comes to investing in mutual funds because I see you are into ETFs? I’m sure you have read their books or at least know their take on investing. Thanks in advance.
Hi Valerie. Thanks for stopping by! I personally take everything I read from personal finance gurus with a grain of salt. I think Dave Ramsey and Suze Orman have some good ideas but I don’t think there’s a one size fits all personal finance approach. And to be quite honest I’m not a huge fan of either one of them. I should also point out I am in no way, shape of form, and investing pro. I can only tell you what I’ve learned 🙂
Mutual Funds and ETFs are quite similar. (Except maybe actively managed mutual funds that come with high fees.) But mutual funds generally require more money to get started. Where as ETFs you can start with anything.
They’re both diversified investments.
Betterment only invests in ETFs so I just let them do all the work for me. I’m obviously not the greatest at choosing stocks myself 🙂
Great post Alexa! Sometimes I think we over think the savings process and then paralyze ourselves from taking action. This is pretty painless.
Now this is a really good way to do it. A small increase won’t probably ruin your ‘balance’, but will clearly add up faster to more money. I’ll try to apply this strategy myself and see what it brings me.
Betterment sounds cool but I was wondering if you had heard about the acorns app. Every time you swipe your debit card it rounds up your purchase and invest the difference. I bet a little bit of change everyday would add up over the months.
I like the idea of painless. I am 16% of the way to my goal to maxing out my IRA this year. I will admit though for me it’s not painless. I don’t make a lot so 450 a month hurts a bit to put into an IRA for the “future.” I also am distrustful of the stock market. I go through USAA because i was in the military. They also have a low minimum amount too. But bettermint sounds interesting.
What a great idea to first of all just Start with a small amount and then regularly increasing the percentage by a small unnoticeable amount. Investing just lost a lot of the intimidation of saving up thousands of dollars to make the initial investment. I found this article at Thrifty Thursday.