by Dana George | Published on Sept. 27, 2021
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It's never too late to invest in your future.
Articles outlining how much money you should keep in your bank account, 401(k), brokerage account, piggy bank, or hole in the backyard tend to touch a nerve. That's because we're all different -- there is no one-size-fits-all pattern. So this article is meant to show you how hitting specific benchmarks can make your financial path easier.
If you're 30 and have more than enough put away, that's amazing. Well done. Now make sure you have plenty in an emergency account, in case things go south between now and whenever you begin drawing from your brokerage account.
If you're 30 and nowhere near such idealized goals, give yourself a break. You are not alone. According to the Federal Reserve Bank of Minneapolis, nearly 25% of people responding to a survey last year said they were worse off financially than they had been one year earlier. Job loss, illness, divorce, and other unexpected bumps in the road can knock any of us off the path.
The following statistics are in no way meant to discourage anyone who's not quite there. They represent a starting point to think about the small things you can do to build wealth and prepare for a prosperous future.
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When we talk about how much you should have in a brokerage account at age 30, we don't mean an employee-sponsored 401(k) or other retirement accounts. We're strictly talking about a brokerage account for buying and selling various investments, including stocks, bonds, mutual funds, and ETFs.
Here's where the math gets fun. One popular way to know if you're on track is to check how close you are to having your annual salary put away for retirement. So, if you're currently pulling down $45,000 a year, you would ideally have $45,000 invested and working for you.
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And the best news? That $45,000 doesn't all have to be invested in one place. Let's say you've been contributing to your employer-sponsored 401(k) plan or have a Solo 401(k) plan of your own. If you have $25,000 tucked away there, having $20,000 in a brokerage account means you're at your goal ($25,000 + $20,000 = $45,000).
See what we mean about it not being a one-size-fits-all situation? If you currently earn $75,000 per year, the ideal amount for you would be $75,000, possibly spread out between brokerage and retirement accounts. The amount is unique to you and how much you earn.
The goal line will move as you age, of course, but if you aim for that amount right now, it will be easier to hit more substantial goals later.
If your life has been more financially challenging than you expected, don't be discouraged. Age 30 is still young enough to regroup and build an investment strategy that works for you. And it's plenty of time to let compound interest work in your favor.
Think about the financial magic you could work over the next 30 to 40 years. For example, if you find a way to put $100 aside each week, that's $5,200 annually. Divided by 12, that means you would have $433 to invest each month. Assuming an annual return of 7%, you would have around $833,000 put away after 37 years.
Even if everything under the sun has gone wrong in your life, at age 30, you have time to recover. That said, now is the time to start -- even if you start small and slow.
If you're worried that you don't have enough to begin investing, just get started anyway, even in a small way. Nearly all the brokerage firms on our "best-of" list have no minimum investment amount -- and you need only $1 to start with the one broker requiring a minimum investment.
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An estimate of how much you should have by a particular age is nothing more than a suggestion. You may find that you want more, or can get by on less than the recommended amount.
Don't beat yourself up about what you "should" have done -- regroup and ask yourself what you can do. All that matters is what you do from this point forward.
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