Investing 101 For Teachers: Learn The Basics And How To Get Started

Teachers are some of the most important members of society, guiding our children’s education and inspiring future generations to become the leaders of tomorrow. However, about 40 percent of public-school teachers do not qualify for Social Security benefits, according to the National Association of State Retirement Administrators. Despite this challenge, there are options for public educators to secure their financial future when it comes to how to invest and plan for their retirements.

This handy guide outlines some of the investments that could set up teachers – and their families – for financial success.

Why investing is so important

For teachers and the broader public alike, saving and investing over long periods offers the most significant opportunity to build wealth. Whether it is investing in the stock market, real estate, or both, investing is how many Americans reach their financial goals. And the sooner you start, the better.

Consider a theoretical example where Susan, a public-school teacher in New York, starts investing at age 25, contributing $400 per month to a fund that tracks the S&P 500 index. By age 65, Susan would have contributed a total of $192,000. Assuming a 7 percent annual compound return for the S&P 500, her total investment would have grown to about $958,000.

Now, consider Joe, a public-school administrator in New Jersey, who doesn’t start investing until age 35. He also decides to contribute $400 per month to a fund tracking the S&P 500. By age 65, Joe would have contributed $144,000. However, by delaying his decision, the return on his investment is around $453,000, or about half the amount Susan received.

Investing scenario over 30 years

The total earnings in these two scenarios aren’t unrealistic. For example, over the past 30 years, the S&P 500 posted an average annual gain of around 10 percent. And when accounting for dividend payments, the returns are even higher.

However, the difference in how these two scenarios play out is due to compounding interest and time. By…

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