This video is based on a mistake I see way too many people make. I recently discovered that a close friend had made this mistake - and for the last 15 years he thought his money was growing in his Roth IRA, but really it was just sitting in cash.
Here’s the mistake people make:
They’ll open a Roth IRA, fund it, and then assume that they’ve completed all the steps. The critical forgotten step is that once you fund your Roth IRA, you actually need to decide what to invest the money in (i.e., stocks, ETFs, mutual funds). If not, your money will just sit there collecting minimal interest.
Assumptions made for this video:
You start at 18 years old
You contribute $6 a day (aka $2190 per year)
Expected rate of return: 8%
Retirement age: 65
At retirement your Roth IRA balance would be $1,071,199
Now at that point, you’d only actually have contributed $102,930 (so all the rest is the growth aka power of compounding interest)
That’s why the other person sees that they only have $102,000 in their account, because it was basically just sitting as cash in their Roth IRA since they never actually took the final critical step of picking what to invest it in.
If this was helpful, you’re really going to enjoy my podcast to level up on your finances & life! Search “Erika Taught Me” on Apple Podcasts, Spotify, YouTube or wherever you get your podcasts to dive even deeper into conversations about money, business and success with me. Start with Episode 28 (“How Investment Advisors Rip You Off”) to learn about investing.
