It’s The Contribution, Stupid!
iPhones, avocado toast, and other money distractions.
It’s the contribution, stupid! There, now that I have your attention. No, I would never call any client or friend stupid. But at the same time, we all get lost in things that don’t really matter. These are called day-to-day distractions.
For instance, investing in the right mutual funds is good. Choosing the right asset allocation is better. But probably the best thing you can do for your financial plan is to save more. This obvious but all too often ignored conclusion was illustrated in a study by Putnam Investments, which created a 28-year-old Average Joe who makes $40,000 a year. First, Putnam had Joe invest just 2 percent of his pay, with a 50 percent employer match; receive 3 percent annual raises; put only 30 percent of his 401(k) in stocks; and pick funds that returned in the lowest 25 percent of their peers. Starting in 1990, Joe in 15 years would have $39,731 in his account.
Then Putnam ran new scenarios. If Joe successfully picked top 25 percentile funds, he finished $2,000 richer. If he beefed up his stock allocation to 66 percent but still picked crummy funds, he pocketed $8,500 more. But if he doubled his contribution to 4 percent, while still investing conservatively and picking bottom funds, he earned almost $40,000 more. If he boosted his savings from 2 percent to 6 percent, he tripled his account value.
Now in this new-age of avocado toast and the latest iPhones, where is your money best treated?
If you feel like it’s time to review your budget and other cash management issues, let’s talk! To help better manage our time, please click the following link to schedule a call that fits best in your calendar.
Simply click Call With The Gardner Group and pick (2) times/dates.
From there, we will match up the best dates/times with our calendar. After our check in, we hope you have a clear understanding of your situation, see how we add conveniences to your life, and most importantly, gained a higher confidence.