Save like mad for five years—retire with millions

For years, I’ve been preaching the gospel of saving seriously for a few years when you’re young, then giving that money lots of time to grow into a retirement nest egg.

I recently met a man who’s helping his 18-year-old niece do exactly that while he generously and wisely plays the part of her rich uncle.

If all goes as planned (and that of course is a big assumption), this young woman (I’ll call her Madison) will have a huge head start on her retirement when she’s 65. And along the way she will learn about investing and about passing good fortune on to the next generation.

It’s a terrific story, and Madison’s uncle, who I will call Kevin, has done it before with a few young people. Kevin knows enough to appreciate several powerful factors that lead to long-term investment success:

·      Time and patience

·      A sound plan, and the discipline to stick with it

·      A research-based approach to portfolio management

Madison has something Kevin doesn’t have: lots of time.

Kevin has something Madison doesn’t have: the ability—and the generosity—to invest a total of $30,000 into a Roth IRA in her name over five years.

Together, they have a shared vision of making something happen that neither could accomplish alone.

Read: These are the Best New Ideas in Retirement

Madison is focused on earning as much money as she can now (she is about to graduate from high school in Colorado and has been working at a supermarket as a cashier), and applying all her earnings to the cost of college and veterinary school. She hopes to wind up with as little educational debt as possible.

Kevin’s already put the first part of his plan into action, giving her $6,000 to put into a Roth IRA for 2021. He’ll do the same for each of the next four years, for a total investment in her future of $30,000.

“She needs to invest her own money right now in her schooling,” he said….

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