{"id":7626,"date":"2023-11-04T22:35:54","date_gmt":"2023-11-04T22:35:54","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/?p=7626"},"modified":"2023-11-05T22:21:04","modified_gmt":"2023-11-05T22:21:04","slug":"investing-is-a-marathon-not-a-sprint","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/investing-is-a-marathon-not-a-sprint\/","title":{"rendered":"Investing is a marathon, not a sprint"},"content":{"rendered":"

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Any\u00a0marathon runner will tell you: You don\u2019t think about all 42 kilometres at once.\u00a0That would be too overwhelming. Instead, picture the race in chunks: 5km, 10km,\u00a0or even one kilometre at a time. Manageable chunks.<\/p>\n

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This same philosophy can be useful when saving for your post-work life, especially when it\u2019s still decades away. While the idea of saving a big enough chunk of money to retire comfortably may feel like a near-impossible feat, investing just $150 or so per month in your 20s or 30s seems much more reasonable \u2014 and that still may get you to your desired savings goal by retirement age, provided you\u2019re disciplined, start early, and hit your \u201csplits,\u201d as runners would say.<\/p>\n

For\u00a0the sake of simplicity, let\u2019s set aside inflation, fees, taxes and dividends.\u00a0Yes, those things are important, but it\u2019s more important that you just get\u00a0started, save regularly, and experience the power of compounding returns.<\/p>\n

Here\u2019s what this example could look like, assuming market returns of 6% p.a.*:<\/p>\n

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source: moneysmart.gov.au<\/a><\/figcaption><\/figure>\n

Okay,\u00a0deep\u00a0breaths<\/em>.\u00a0We\u2019re going to walk you through these targets, and explain why\u00a0they\u2019re more reachable than you might think \u2014 and why, if you\u2019ve hit 30 and\u00a0haven\u2019t saved that much, it\u2019s not too late.<\/p>\n

The\u00a0first thing you\u2019ll probably notice about this chart is that the growth in your money exponentially increases as time goes on. This is due to the power of compounding returns. You\u2019ve probably heard about compounding before, and not for lack of good reason, since understanding this concept can be super valuable for your finances. It\u2019s often described as interest on interest, which means that if your money grows by 6% in a year, and you don\u2019t withdraw any of that money, the next 6% you earn will be a larger dollar increase, since it is growing from a larger base than the first year. This goes on and on, giving your money the potential to grow at an exponential rate, which explains the growth in our chart above.<\/p>\n

The human brain is notoriously bad at estimating exponential growth, so a useful rule of thumb you can use is the rule of 72. This is a rough calculation of how many years it takes to double an investment and is calculated by dividing your rate of return (interest rate) by 72. If you earn a consistent 6% p.a. on your money, for example, it will take roughly 12 years to double your money.<\/p>\n

With a disciplined and regular saving\/investing strategy, it is entirely possible to start a humble retirement account in your 20s and 30s and still be on target to retire with a decent nest egg. You just have to hit your splits.<\/p>\n

It is important to keep in mind that although 6% p.a. is a reasonable estimate for stock market returns over the long term, it is by no means a guarantee. All investments carry risk, and it\u2019s impossible to know the actual return you will make on your investments in the future.<\/p>\n

Another thing to keep in mind about your contributions: As you get older, you\u2019re likely to increase your income, so it wouldn\u2019t be unrealistic to increase your monthly $150 to something more substantial, adding more fuel to your marathon and potentially boosting your final retirement fund.<\/p>\n

You can think about saving for retirement just like you would if\u00a0training for a marathon. Instead\u00a0of just waking up one day and trying to sprint 42km, you need to train, and\u00a0start working on your financial fitness. With our Round-Ups and automatic investing features, you can hit your splits\u00a0whilst living your everyday life. For more information on Raiz fees, click\u00a0here<\/span>.<\/a><\/p>\n

There\u2019s no denying the power of regular savings, time\u00a0and\u00a0compounding. A journey of a marathon begins with the first\u00a0step. A journey to $1 million begins with your first $100 investment.<\/p>\n

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*Return estimated for the sake of simplicity as past performance is no indication of future performance \u2013 see\u00a0<\/em>ASICS managed funds fee calculator<\/em><\/a><\/span>\u00a0to get an estimate on how fees and costs can affect your investment. Return estimate is net of MER. The value is a future value, not a present value.<\/em><\/p>\n

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Don\u2019t have the Raiz App?<\/h3>\n

Download it for free in the App store or the Webapp below:<\/p>\n

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\"download-raiz-app\"<\/a>
Click to download the Raiz app<\/a><\/span><\/figcaption><\/figure><\/figure>\n

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Important Information<\/em><\/strong><\/p>\n

The views of these experts are not necessarily the views of Raiz. Please consider your own financial goals and circumstances when making an investment.<\/em><\/p>\n

The information on this website is general advice only. This means it does not take into account any person\u2019s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.<\/em><\/p>\n

A Product Disclosure Statement for Raiz Invest and\/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.<\/em><\/p>\n

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.<\/em><\/p>\n

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.<\/em><\/p>\n

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Any\u00a0marathon runner will tell you: You don\u2019t think about all 42 kilometres at once.\u00a0That would be too overwhelming. Instead, picture the race in chunks: 5km, 10km,\u00a0or even one kilometre at a time. Manageable chunks.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[]}