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Saturday, August 20, 2011

Retirement accounts

Two friends of mine were sitting around discussing retirement accounts.

Friend A said he has money in a retirement account but was considering taking it out because he was afraid of the market.

Friend B said she does not have money in a retirement account because she is afraid of the market. She's afraid she will lose her money if the market crashes.

Friend C invested in a 401K and  his work matches up to a certain point. Any extra money invested is in a Roth IRA account.

Friend A asked friend C:  "Why do you invest so much? What if the market crashed? What would you do?"

Friend Cs answer was simple, "If you do not invest in your retirement, there is a 100% chance you will have to keep working until the government says you can retire. Historically, the stock market has doubled during any 10 year period, and that includes the Great Depression. So, if you invest in the stock market, there is a 90% chance you can retire when you want."


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