Because the unexpected happens, try to invest three to six months’ worth of your take-home pay into an easily accessible account, such as a money market fund.*
*An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although it seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.
You may have 40 years of working before reaching retirement age. During that time, your investments have the potential to grow through decades of compound earnings. This means your assets have the ability to generate earnings, which are then reinvested in order to generate their own earnings. Try to contribute 15% of your gross income to retirement accounts (this target includes any employer match). If you can’t start at that level, contribute at least enough to receive the amount your employer matches, and then increase your contribution rate by 2% each time you receive a salary increase.
See how quickly a monthly investment of $50, $100, or $200 in a tax-deferred account can grow.
Use our Automatic Asset Builder calculator to discover the power of compounding. Simply fill in a monthly amount and see how much your money could grow over 20-, 30-, and 40-year periods.