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Is there any point in saving for the future?

Updated: May 15, 2023

Is there any point in saving for the future? It's a question that many of us have asked ourselves at some point in our lives. On the surface, the answer might seem obvious: of course, you should save for the future. After all, we all want to be financially secure and comfortable as we age. However, the reality is more complicated than that. Simply saving money in a regular savings account won't make you wealthy, and bank account rates aren't that good. So, what's the point of saving for the future, and how can you do it effectively?

Get wealthy by saving?

Saving money in a regular savings account won't make you wealthy. The average interest rate on a savings account in the US is currently around 0.23%. To put that into perspective, if you were to save $10,000 in a savings account for a year, you would earn just $23 in interest. That's not going to get you very far in terms of building wealth.

So, if saving in a regular savings account isn't going to make you wealthy, what should you do instead? The answer is simple: invest. Specifically, investing in simple index funds like the S&P 500. Index funds are a type of mutual fund that tracks a specific index, such as the S&P 500, which is made up of the 500 largest publicly traded companies in the US. By investing in an index fund, you're essentially buying a small piece of all the companies in that index, which helps to diversify your investment and reduce risk.

One of the benefits of investing in index funds is that they tend to have low fees and expenses compared to actively managed funds. This means that more of your money is being invested, rather than being eaten up by fees. Additionally, index funds tend to outperform actively managed funds over the long term. According to a study by Standard & Poor's, over a 15-year period, 92.2% of large-cap fund managers underperformed the S&P 500.

The stock market comes with risks.

The value of your investments can fluctuate greatly, and there's always the possibility that you could lose money. However, over the long term, the stock market has historically provided higher returns than other types of investments, such as bonds or savings accounts.

Time in the market > timing the market

One key factor to consider when investing in the stock market is time. The longer you stay invested, the greater your chances of earning a positive return. According to research by Fidelity, if you had invested $10,000 in the S&P 500 in 1980 and held onto it for 40 years, your investment would be worth over $1,000,000 today. According to this Winthrop Wealth Chart. However, if you had pulled out of the market during times of volatility, your returns would have been much lower.

So, is there any point in saving for the future? The answer is a resounding yes. However, it's important to do so effectively. Simply saving money in a regular savings account won't get you very far. Instead, consider investing in simple index funds like the S&P 500. By doing so, you can potentially earn higher returns over the long term and build real wealth.

If you're looking for more guidance on how to build wealth, I highly recommend checking out Jasper Smith, who is known online as Mr #Buildwealth. Jasper is a financial educator and entrepreneur who is passionate about helping people achieve financial freedom. His website, The Build Wealth Movement, offers a wealth of resources and information on how to build wealth through investing and more.

In conclusion, saving for the future is absolutely worth it. However, it's important to do so effectively by investing in simple index funds like the S&P 500 and staying in the stock market for the long term to reap the benefits. By investing wisely and staying committed, you can build real wealth and achieve financial security for yourself and your family. And if you're looking for more guidance, be sure to check out Jasper Smith and The Build Wealth Movement.


Money Talk with Skyler Fleming

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