Compounding Your Way To Retirement Using A Savings Plan

How much TIME have you got until retirement? The answer is different for all of us, we are all different with our lifestyle, interests and needs. Sometimes how much you have in your retirement account dictates when you retire, not age.

If you work for someone else, your employee status may not be something that you enjoy, you can not wait to leave. Or maybe you love your work and would never dream of leaving. At some point in your life you will look at your current work situation and think, am I happy doing this for another 10 or 20 years?

Whatever your situation, a savings plan, where you put regular savings into an investment, provides 'peace of mind' and also creates a great discipline. Once you start it becomes easier, like all habits. If you can save 10% of your income, put 5% into a regular savings plan and invest into companies who pay out dividends regularly, your retirement could have been the best time of your life.

Free to pursue whatever interests you have at your own pace, maybe starting your own business. Sadly, the vast majority of people live week to week, have meagre savings, and at retirement age, find out they do not have enough money.

You can change this way of living, it takes discipline and focus, and the need to better your situation. Plan a way to save 10% of income (or more) now, write out a budget and stick to it! 5% of your savings can go to a savings account for future expenses, and 5% can go to your COMPOUNDING strategy.

Your COMPOUNDING strategy can consist of buying dividend paying companies, then reinvesting those dividends into MORE shares.

Say you can save $ 20 a week, over a year you will have saved $ 1040, enough to start a regular annual investment. Over decades and decades, contributing $ 1000 into quality companies will start your 'snowball' rolling. The longer your snowball rolls (the more TIME you contribute) will have a huge effect on your account balance.

When your account grows enough, so that the desired income per year is reached, you can switch from dividend reinvestment to receiving cash. As long as you still own the dividend paying companies, you will have an income. Sadly the growth in new shares is not there, but your aim of an income stream is.

Even if you are 50 or 60, starting a savings plan for the future is worth doing. With modern advances in medicine, many more of us will live to 90 or 100.

Plenty of TIME for our COMPOUNDING strategy to work.