$365 Dollars can pay for your child's first years of retirement!
For one dollar ($1) a day, you can set your child or grandchild on a lifelong path to prosperity. Managing Partner, Terry Herr, CFP®, CLU covers how modest investments could potentially cover the first years of your child's retirement. Watch this short video for a fascinating trip into the power of compound interest.
In this episode of The Prosperity Blogcast, Managing Partner, Terry Herr, CFP®, CLU talks about how to help set your newborn on a lifelong path to financial prosperity.
$365 Dollars can pay for your child's first years of retirement! Transcript (2:55)
Congratulations it's a baby!
There's nothing more exciting than welcoming a new child into a family. Whether you're a parent or a grandparent, today we're going to talk about how you can take a dollar a day and set that child on a lifelong path to financial prosperity, and pay for their first year or first years of retirement income. I'm sure that's the first thing you thought of when the child was born, how do I pay for retirement income, right? Hey I'm a financial planner so that's how i think but let's talk about this. If you could earn 7% every year from now until the age the child reaches a age 23 - which is about the time that they'll graduate from college.
Hey congratulations you have a college graduate!
That money would accumulate to $22,969.
Now let's say they go get a job.
Congratulations you have an employed child or grandchild!
...and let's just say they didn't learn anything at all and they just left it. Didn't contribute to it, that would grow to $393,000 by the time the reach ae 65.
Now let's assume they took your example and continued to save just one dollar a day from now until the age they reach 65, that's from 23 to age 65 . That money would accumulate to $484,000!
Now let's say they were really paying attention in math class or finance and they saved six thousand dollars a year, which is the current IRA contribution limit (2020) So they could do this that would accumulate to over $1.8 million dollars!
Now let's say they were really smart and instead of 7%t they eked out an 8% return that $365 dollars plus the six thousand dollars per year when they start working (at age 23), would accumulate over $2.5 million dollars!
Albert Einstein and Compound Interest
It's crazy to think how long-term systematic periodic investments can make a huge difference. The compound interest is an amazing thing. Albert Einstein called it the eighth wonder of the world.
So if you want to learn how to set your child or grandchild on a lifelong path to prosperity and financial success. give us a call we'll walk walk you through how this concept works. We can also help you with your retirement or any other financial question you have because we're here to help you live a life prosperity.
So like us, follow us, get in touch with us, feel free to ask us questions.
Thanks for taking the time to see us today
CLARIFICATION: At time stamp 1:42, we mention the IRA contribution limits and then go on to say the concept will work whether employed or not. In order to make an IRA or 401(k) contribution you must have earned income. However, not having earned income does not preclude someone from investing. Please consult a tax advisor for the most up-to-date tax information and contribution limits.