Playing it safe with your money may sound like the most practical thing you can do to establish a solid retirement fund. However, play it too conservatively and you may end up doing more harm than good.
For anyone who's not already a member of the super-wealthy club, one of the best ways to accumulate enough savings to reach millionaire status is to invest in the stock market. Now, that's not to say you should invest your life savings in that hot new tech start-up; instead, put your money in low-cost index funds and mutual funds.
Although the stock market will always experience ups and downs, these types of investments are a relatively safe bet over the long term. Over the course of several decades, you'll typically see average annual returns of around 6% to 10% with these investments.
Compare those returns, then, to the returns you'd see with a savings account or lower-risk investments like CDs and money market accounts. Even the best savings accounts have interest rates of around 2%, and the annual returns for CDs and money market accounts typically hover around 2% to 3%. At that rate, your savings may not even outgrow inflation – meaning your money could actually lose value the longer you keep it in these types of accounts.
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I found out my issue too conservative until March 2019, four months hundreds of hours research on personal finance.
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