I believe financial advisers often seem to assume their clients have a time machine. They like to explain that, with enough time, anyone can enjoy a financially secure retirement. For example, if you invest $200 a month every month for 40 years, your account will be worth $1.2 million if stocks gain an average of 10% a year.
The math behind that calculation is correct, but there are two big problems in the real world. The first problem is that most of us don’t have 40 years before retirement. The second problem is that those with 40 years until retirement, young people in their 20s or 30s, don’t have money to invest for the future when their bills need to be paid every month.
Today, I want to focus on just one small piece of what advisers talk about.
This post originally appeared at Investors Alley.