If you have $100,000, congrats: That amount of money is more than most people have. And $100K is a very nice start on your road to creating a retirement foundation.
But chances are, you would like to retire with much more than $100,000. In fact, you may even be able to reach a retirement goal of $1 million in savings.
The following moves could easily turn your $100K cash into a whopping million by the end of your career.
1. Don’t touch your savings
When you have a lot of cash in your retirement plan, it can be tempting to remove that money from your savings before retirement.
But that is a huge mistake. If you wish to turn your $100,000 into $1 million, then you need to leave your money where it’s at. Also, if you do an early withdrawal using a non-exempt reason, you will get slapped with a large penalty on the amount you removed, thereby hurting your savings efforts much more.
2. Get heavy into stocks
Stocks are a pretty risky investment, especially when you compare them to bonds. But they also seem to give much higher returns, and if you put your long-term savings into stocks, you will set yourself up to grow your balance into much a larger one.
Of course, choosing stocks for your retirement can be hard, especially if you do not know much about investing. But a good plan is to invest in S&P 500 index funds, which are passive funds that seek to match the performance of the entire S&P 500 index.
3. Delay if you must
If you are sitting on $100,000 and you are 30, you might not have to put another dime into your retirement plan to get to $1 million. In fact, if you kept that sum in your retirement account for 30 years and your investments gave an average 8% return, which is some percentage points under the stock market’s average, you would have just over $1 million.
However, if you are older, then you should think about postponing retirement to allow your money more time to grow.
Author: Blake Ambrose