Jonathan Clements and the Nine Commandments-Number 6

This is a big one--Pay attention.

Number 6

As soon as you enter the work force, start saving and investing.  Initially, your financial progress will seem agonizingly slow and the sacrifice involved will hardly seem worth it.

But if you sock away 10% or 15% of your salary every year for 10 or 15 years, you should hit critical mass-and suddenly your portfolio will start growing by leaps and bounds.

Truer words never spoken--and usually routinely ignored.  It's that inertia thing again.  Hard to get started. 

Once started though this thing is hard to stop.  Clements calls it growing by leaps and bounds.  I look at it more like a snowball going downhill--once started, it cannot be stopped.  But this is so boring because for years it just kind of sits there and years, when you are young, are like light years.  A year takes forever so who cares about investing?

As noted too many times to even think about the best way to get over inertia is to set up a plan and forget about it.  Go to Human Resources and set up the old 401k.  Unless you work for the Post Office or the military, it is the only retirement package you are going to get.  SO GET IT DONE.

On the after-tax side, call Vanguard or Fidelity or your bank or somebody and set up an automatic hit to your checking account on payday.  Make it some amount you can live with and then forget about it.  (Just thought of Capital One--they have a no minimum balance deal.)

Go about your way.  Check on the money whenever you feel like it.  But don't obsess.  My wife used to call it 'no good money' because we didn't touch it.

But remember what a few people have said regular investing.  Albert Einstein called compound interest the "eighth wonder of the world."  Samuel Bronfman said the "First million was a lot of work, the second million was inevitable."  The same goes for smaller amounts of dollars.    

Comments

[Hermes]

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[jason kenny]

Nice writing. You are on my RSS reader now so I can read more from you down the road.

[Wanda]

Thanks for this post. I guess it's easy to feel like my money's "just sitting there." I'm hoping to really buckle down and save enough that I can hit the "critical mass" several years early and watch it snowball. :)