Investing $100 per week beginning in your early 20s will likely see you have more than $1 million waiting for you at retirement, Shark Tank US judge Kevin O’Leary said.
66-year-old entrepreneur O’Leary told MarketWatch that there was a “very simple tactic” people can use to ensure they would be set up for retirement.
“I call it the 90-day test. It is very simple, and doesn’t even require any technology,” he said.
“Look at everything you bring in, it could be a side hustle, a salary...all of the income, every single dime of it. Then you do the same thing for expenses, and what you’ll find is many people are living above their means, and they’re spending more in a 90-day period than they’re taking in.”
If you do find yourself spending above your means, there’s a simple fix, he said.
“Most people buy stuff they don’t need. So I say everybody can reduce their cash out by about 15 per cent, minimum. It is very simple to do.”
Also read: How to buy your first shares
And with the cash you save, there’s one question you should ask yourself: “do I need this or should I take this money and invest it?”
You don’t need to be a stock picker or a day trader to do this either, O’Leary said, nor do you need to be earning a six-figure salary.
“I am telling people, you can find a way to save $100 a week and invest it,” he said.
“One hundred bucks a week. There’s some crap you don’t need to buy that equals $100 and if you do that and start in your early 20s, you’ll end up with $1.5 million in retirement. That’s my mission, that’s my goal,” he said.
The “simple tactic” O’Leary refers to is not too dissimilar from the FIRE movement – Financial Independence Retire Early.
The premise is this: eliminate your debts, tame your lifestyle costs and free up your disposable income. Then, use that new cash to invest.
Avid FIRE movement follower Michelle Ives told Yahoo Finance that she’s now looking at a full retirement by 35.
“You don’t need to be earning a bomb to be an investor,” Ives said.
“There’s no deprivation involved in saving that much of your income. It is an adjustment, sure, but just like we tend to spend more when we earn more, we equally can learn to be happy on less if we simply allowed ourselves to live on less.”
How do I invest?
While investing was once seen as just for the wealthy, now there are plenty of cheaper options to purchase shares online, Finder’s Kylie Purcell said.
But if you’re unsure how to invest in stocks, you’re not the only one. Here’s how to get started.
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