Investing in your future especially in a retirment account takes time and discipline. You most likely won't see the money grow too fast anytime soon. Remember that slow and steady wins the race.
I've been contributing to my 401K since the age of 22. However, I made a costly mistake to cash it all out to use as a downpayment towards our first home. Since then, I've gotten back on track and is now contributing 15% of my paycheck towards my golden years.
Here are some other costly mistakes that people often make to detriment their retirement accounts. Are you one of these people?
1) Blowing retirement savings early
This happens when people switch jobs and are forced to decide on whether to roll their 401K into an IRA or cash it all out. And guess what the majority ends up doing?
2) Turning down free money
That's right, you heard me. The money is FREE and is waiting for you to collect it. But what do you do, you end up turning this free cash away. You do this by not participating in your company's 401K match.
I've seen this all too many times happening to friends and even current coworkers at my workplace. I ask them why not get a few hundreds to thousands of dollars for free each year. They reply with being lazy = lame.
3)Saving without a goal
Unfortunately, many of us get this magical retirement number wrong. We end up miscalculating the wrong retirment age and not meeting its goal by socking away the correct amount every month. Then when it comes time to retire, you just don't have enough to last you through.
4)Ignoring your investments
Your retirement assets require regular upkeep just like your house and your car. Ignore them and they could fall apart. Be sure to review and rebalance your investments at least once a year to make sure you're comfortable with the level of risk in your portfolio.
Getting a late start is just as bad. For proof, look at the following examples.
Let's say a 25 year-old begins saving $3,000 a year, but stops after only 10 years. Over the next 40 years, she could expect that $30,000 investment to grow to more than $472,000, assuming an 8% return.
If the same investor waited until age 35 to begin saving and stashed $3,000 a year for 30 years, she could only expect to have about $367,000, assuming the same 8% annual return.
By waiting 10 years to start saving, you lose out on the benefits of time and compounding returns, not to mention over $100,000!