I'm sorry, but investing a few bucks isn't going to cut it if you want a successful retirement.
It's true that the important thing associated with saving and investing is that you get started. Right now. Even if you only have a few bucks a month to invest, you should get started. However, it's vital that you progress further as you earn more money. It's not going to help you much if you remain at the same level of investing throughout your life.
I started thinking about the problem many of us have with investing this morning, after reading a great post from Dr. Dean. He points out that too many of us focus on asset allocation and not enough on putting more in the retirement portfolio in the first place:
[W]e need to be focusing more on our earnings and the amount of our retirement savings rather than spending endless hours tinkering with our investment choices.
Those of you who smugly say, ?I?m doing my part for my retirement,? while only saving 3% are just as bad as those buying lottery tickets every day to fund their retirement.
Sure, it's important to diversify appropriately, and look for value, and do all those things that savvy investors do. But you need to have the right-sized portfolio for it to work out in your favor.
Increase the Amount You Invest
It's true that, while you are a college kid with a part-time job, or while you are working on digging out from under mounds of debt, you might only be able to invest $50 or $100 a month. (Interestingly, the investing web site Betterment expects you to invest $100 a month at a minimum.)
Don't think for a second, though, that investing $100 a month automatically for the rest of your working life is the road to riches in retirement. As you pay down debt, move on to better jobs, and find yourself with a higher income, you need to boost what you are investing each month. If it's too hard to make the jump from investing $100 a month to investing $500 a month (or more), you can step it up. Make a plan over the next few months to add another $50 a month to your automatic investment. Every two or three months, step up your monthly investing plan by a little more.
Investing more each month doesn't have to be an all or nothing proposition. Work up to it until you're comfortable, but don't take too long. Realize that an increase in income shouldn't be an excuse to go on vacation more, or buy more toys — at least until you have upped your regular monthly investment.
And, to further drive the point home, enjoy this awesome “Financial Rant” from Jeff Rose at Good Financial Cents. Whenever I wonder if I should invest a little more, I watch this rant to remind that I could probably be putting more aside. It'll be better for you in the long run.