Want to Retire? Make Your Money Work for You

make-your-money-work-for-youBe honest. Don’t you think that most people spend way too much time and energy worrying about or trying to influence financial matters they can’t control? It’s true.  My advice is to not focus on financial matters you can’t control. Make Your Money Work for You. Focus on the things you can influence and that will make a big difference in your life.

For example, you can’t control time, but you can control the time you spend preparing for retirement. You cannot control Social Security, but you can put money aside in a way that can provide a comfortable retirement whether or not Social Security is there for you. You can’t control that pension plan you’re in, but you can maximize the contribution you put into that plan.

Another thing none of us can completely control is financial risk. But you can minimize your financial risk through smart strategies like diversification. Diversification means placing funds in a variety of stocks, bonds, real estate and other investments to reduce your exposure to risk since different asset classes are unlikely to move up or down in value at the same time or rate.

So focusing on what you can control, and diversifying your investments are two ways you can better make your money work for you. Here’s a third idea.

Make Your Money Work for You. Pay Yourself First
What’s the number one bill you should pay every month? It’s not your credit card bill. It’s not your mortgage. Of course, those and other bills are important to pay. But if you want to maximize your opportunity for a financially comfortable retirement, your number one bill every month should be the amount you pay into your retirement fund. No one cares about your retirement finances like you do. Only you can build what you need.

Some ways to help pay yourself first are:
1. Have a monthly retirement savings goal and reach or exceed that savings amount every month.
2. Treat your retirement savings goal as your most important household bill. Pay it first.
3. Take full advantage of any employer-sponsored saving plans.
4. Give the maximum you can to your 401(k) or other retirement savings plans.

Aren’t you as important as the telephone company? Don’t you rate as highly as the credit card company? Yes, pay all your creditors, but don’t leave yourself off that payment list.
One final idea for making your money work for you is to remember the Rule of 72.

Double Your Money
The Rule of 72 is a formula for estimating how long it will take for you to double your money. The Rule of 72 demonstrates the dramatic positive effect time and compound interest can have on your savings.

Here’s how you use The Rule of 72. Divide 72 by the rate of return the money you save or invest will earn. The answer tells you how many years it will take to double your money. For example, if your investment guarantees a 4 percent interest rate, your money will double in 18 years. (Because 72 divided by 4 is 18.) Here’s a chart with more examples.

The Rule of 72
Estimates how long it will take for compound interest to double your money.
NOTE: The Rule of 72 is based on a hypothetical illustration. It is not a guarantee.

Interest Rate
Rule 72 Years to Double
4% 72 ÷ 4 = 18.0
5% 72 ÷ 5 = 14.4
6% 72 ÷ 6 = 12.0
7% 72 ÷ 7 = 10.3
8% 72 ÷ 8 = 9.0


Your monthly income should not all be gone at the end of the month. That’s living on a dangerous edge. Save and invest some income every month. When you save and earn interest you’re making your money work for you. You’re also taking care of your financial future. If you don’t do that, who will?


 Gene Offredi, CFP, RFC, Summit Investor Coach, Guilford, CT. Call 203.453.1017 or visit summitinvestorcoach.com.