What Will Your Retirement Look Like?

When you decide to retire, will you be able to enjoy life in a nice home or will you only be able to afford a run-down shack?

 The best time to start a savings plan is when you start your first job. That way you can save a little, but you have plenty of time on your side to grow your savings with the help of compound interest.

 I recently read the book, The Capitalist Code: It Can Save Your Life and Make You Very Rich!, by Ben Stein. In the book, Stein explains in easy-to-understand language about the “wonderful system of stock market capitalism can allow any American to build financial security.”

We often hear about investing in the stock market, but there are so many stocks to choose from and finding a financial planner to help a beginning investor is quite difficult.

 Read Stein’s book to understand why you should invest.

 Once you decide that you want to open an investment account, this post will teach you how to do it.

 According to the legendary investor, Warren E. Buffet,  “All you have to do is buy and hold an “index” of all the largest stocks in the United States and hold onto them and add to them regularly.  If possible, you should add a steadily increasing amount each month or quarter.”

 The index fund will hold all five hundred stocks in the Standard & Poor’s 500 Industrial Stock Index. You don’t ever have to trade. You don’t have to check the prices hour by hour or even year by year. You just buy the index and hold onto it and add money to it.

 The amazing truth is that people who manage money and who pick stocks for investment vehicles, are beaten in performance by the plain-old indexes about 80 percent of the time.

 Buffett has said, “My preferred holding period is forever.”

 You can just go to a Merrill Lynch or a Vanguard or an Oppenheimer or a Fidelity and tell the woman at the desk that you want to open an account that holds as its primary asset an index fund (or exchange traded fund, which is similar).

 Of course, the easiest and least expensive way to set up your account is to find the website of the brokerage you decide to use.

 Of course, you will need a bank account.

I first tried with Fidelity, but could never get them to accept my bank account for some reason.  I then went to Vanguard, and everything was pretty easy. 

 I did have some questions, so I called their support number and the agent was able to clear things up.

 After reading everything I could find on the various S&P 500 indexes, I decided to open a brokerage account and purchase the Vanguard 500 Index Fund ETF.  The main reason I chose that fund over the VFIAX (Vanguard 500 Index Fund) is because the tax consequences seemed to be a little lower.

 With either of these funds, you will be required to pay capital gains taxes each year based on the “buying and selling” they do.  Supposedly, the ETFs trade less frequently.

 However, there is probably not much difference.  Rather than spending valuable time trying to decipher everything, you will probably do better just getting started with your investing.

 Another advantage the VOO has over the VFIAX… there is not a minimum investment for the VOO, but the VFIAX has a $3,000 minimum investment.

 You are required to purchase whole shares of VOO, so look up the current share price to find your minimum.

You can start off purchasing one share of VOO. (UPDATE: 9/1/2025, the price is $593.08)

 First you will go to Vanguard  and choose “general investing.”  It will then ask you whether you want to sign up for an individual account or a joint account.

 Choose your account type.  Then you will select your investments.

 Click on the “Mutual Fund List - ETF’s list,” which will take you to a list of the mutual funds. Choose VOO.

 The next step will be to fill in your bank account information as to where your money to purchase the investment will be coming from (an account transfer).

 Then you will need to sign your application.

 Once your account is set up, you will need to set up your bank transfer for the amount of money you plan to invest.  This money will go into your settlement fund where it waits for you to purchase shares. If you are starting with a $300 or $400 deposit (transfer from your bank), you will just wait until you have the purchase price for one share in your settlement fund (as of 9/1/25, $593.08).

 Once the money has gotten into your settlement fund, you can then purchase the number of shares you want.

 To truly begin to save, you will want to make sure you have set up an automatic account transfer by selecting an amount of money you want transferred each month.

 Then set up a reminder on your calendar to go in and purchase your shares when you have enough money in your settlement account.

 Watch the savings add up.  Even though we are currently in a down market, remember you are buying your mutual funds at that low. 

 Let me know how you do in setting this up.  You can always send me a message on the Contact form if you would like more information.