|See the bucket? That is where you start out saving.|
If one makes $10 an hour and saves 10% of their gross it will take more than a year to save $2000. If it is any comfort, it is much easier to get rich slowly than to get rich quickly
Keep saving. When you are very, very comfortable, move your "extra" money to a higher risk, potentially higher return investment vehicle. Remember, higher risk is guaranteed while the potentially higher return is a matter of faith. I show the bucket of money being moved to a large stock, mixed fund like a S&P Equity Index fund. Strongly consider placing this in a tax sheltered IRA or 401-k for reasons too numerous to elaborate on.
Guess what: At some point your bucket in the middle of the map will be pretty big. At that point you will want to exploit "the efficient frontier".
|Points that are farther to the left have less bounciness while points that are higher have greater returns. Portfolios that are 10%-90%, 20%-80% and 30%-70% International-US stocks have historically show LESS bounciness and MORE return than 100% US stocks. Picture (and a pretty good article) from HERE.|
Studies have shown that overseas markets do not move in lock-step with domestic markets. That can exploited by having some percentage (most studies suggest 10%-to-30%) of your portfolio in overseas markets and by rebalancing your portfolio every year or so.
This model was suggested for the first twenty working years. The last twenty working years involves locking in those gains by gradually increasing the percentage of money you have squirreled away on the left side of the map. So you start out on the left, then the center-of-gravity shifts to the middle or slightly to the right of the middle. At mid-career you start gently shifting the center-of-gravity to the left of center.
The problem with this kind of map is that the map is ALWAYS outdated. Sadly, it is not possible to buy "past performance". In the dry language of legal disclaimers, "Past performance is no guarantee of future results."
The benefit of this map is you can become lost with confidence.