Why her co-workers couldn't stop staring at her 401(k) statement!

Everyone knew Michelle drove a per-owned Nissan Altima, shopped at discount stores and packed her lunch every day. But what they didn't know is that from age 22 to age 38, Michelle grew her 401(k) to over $400,000!!

 
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She accidentally left her account statement on her desk one day and her co-workers couldn't stop staring as they were astonished that she had saved so much. It's not typical for a 38 year old to have a 401(k) account balance over $400,00, but Michelle isn't typical. Here's how she did it:

She didn't "shoot for the moon"!

 
 

First, she contributed 12% of her salary every year and her employer matched her 1:1 up to 6%. 12% was a lot for Michelle, but she made some small changes in her budget and didn't really notice the difference in her life.

Next, her employer also made a 4% profit sharing contribution every year. Michelle is lucky to work for such a generous employer. We focus on salary, but total compensation and benefits matter too.

Although she started at an entry-level salary of $40,000, she also worked hard to get promoted and take on additional responsibility and increased her salary an average of 6% per year over the course of 16 years.

Michelle weathered the ups and downs of the financial markets and stayed invested in her portfolio in both good times and in bad, and averaged a 7.5% annual return for her moderately aggressive portfolio over those 16 years.

16 years later, her account balance now stands at $403,905.09!!

She is well on her way to a comfortable and secure retirement.

You can follow the same principles as Michelle.

- Contribute as high a % as you can afford to your 401(k). But not so much that you max out early and miss out on company match or if you have high interest rate debt.

- Ensure you contribute enough to earn a full employer match

- Manage your human capital (work life) as thoughtfully as you do your investments (financial life)

- Do an honest assessment of your risk tolerance and invest accordingly for the long term

If you'd like help becoming the next Michelle, schedule a free consultation.

PLEASE REMEMBER:

- Investing and investment management involves risk, including the loss of your initial investment or any investment gains.

- Past performance is no guarantee of future results.

- This generic information is provided for educational purposes only and should not be construed as a recommendation for any individual to take a specific action.

- Please invest prudently and seek professional help from a financial advisor, investment manager, accountant, lawyer or other professional on matters that you are unsure of or that are unique to your personal circumstances.

- Financial Advisor and Investment Management Services provided by J. Bradford Investment Management, Nashua NH.