‘It makes an enormous difference’: Warren Buffett said simple calculation is the key to building a generous retirement nest egg
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When you’re investing in the stock market, the cost of your investments matters.
If you pick individual stocks, especially through a broker, these investments cost more — and your advisor will keep a larger share of the earnings.
Warren Buffett, who has made his wealth through shrewd and safe investments, has always advised the average investor to trust index funds. They are inexpensive and are more likely to outperform stock picking.
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Buffet says, “If returns are going to be 7 or 8% and you’re paying 1% for fees, that makes an enormous difference in how much money you’re going to have in retirement.”
To keep as much of your wealth in your accounts as possible, sticking to passive investing could be the right choice for you. Below, we offer our best tips to build your nest egg — ones we think Buffet would approve of.
How much you invest isn’t as important as how often you invest
In a CNBC interview, Buffett advised viewers that even if you can’t make big contributions, the point is to keep investing regularly. No matter what, and no matter how small the amount.
As Buffett stated, “I think it’s the thing that makes sense practically all the time.”
That’s because, with the way that compounding interest works, even small contributions will grow your money over time — Leaving you with a surprisingly hefty nest egg by the time you retire.
With Robinhood’s easy-to-use investing app, you can easily buy and trade stocks, options, exchange-traded funds (ETFs), cryptocurrencies.
Robinhood doesn’t charge a commission to trade stocks and you can buy fractional shares, allowing you to invest the way you want to, without pesky extra fees.
With features like automatic investing, in-app investing guides and 24/7 access to their customer service team, Robinhood makes it easy to diversify your portfolio with stocks whose earning potential might grow over time.
While modern investing platforms make it easy to access the stock market, inflation is making it harder than ever to find room in your budget for investing and saving. Trying to budget and set aside a few dollars here and there, let alone a few thousand, can feel almost impossible.
But that’s exactly what Acorns is designed to help you do. Acorns is a mobile app that automatically invests your spare change for you, so you can reap the benefits of compound interest with recurring investments.
It’s simple: As you spend on bills and daily essentials like gas and groceries, Acorns rounds up the price of each purchase to the nearest dollar. The change then goes into a smart portfolio, growing all the while. Tp help you get started, Acorns is offering a $20 sign-up bonus for a limited time.
Read more: Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead
New ideas for safe savings vehicles
If you’re committed to being a safe investor like Buffett, there are other options outside of stocks and commodities that you can use to grow your wealth.
Certificates of deposit are once again becoming popular as investments for short- and long-term savings. Since the Fed has aggressively raised interest rates to combat inflation, CDs have risen to returns of 5% or more depending on where you bank.
If you’d like to find the best rates on these investments, you can do so with CD Valet.
This online CD marketplace helps users to shop and compare top certificate of deposit rates from various banks and credit unions nationwide.
Their extensive database shows the most competitive rates without bias, with daily rate updates and earnings calculators which give consumers an array of free tools to help them find the right CD to meet their savings goals.
You can find more ways to save with Moneywise’s Best High Yield Savings Accounts of 2024 and find the right bank to help you grow your wealth.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.