Financially-speaking, what are your expectations for the future?
I'm assuming you're visiting this website because you're reasonably optimistic and financially-literate by nature, and that you're after great stock ideas, ideas hopefully that you can put real money behind to grow your wealth … over time.
Stock ideas like Cochlear Limited (ASX: COH), a2 Milk Company Ltd (Australia) (ASX: A2M) or REA Group Limited (ASX: REA).
However, there are many people that won't visit www.fool.com.au simply because they don't know financial websites like this exist (yet).
Low(er) financial literacy for people under age 34 continues to be a problem and it's therefore up to the financially-literate close to them to argue the case that degrees of financial independence are achievable regardless of one's situation.
Here are some facts that people should know about:
- Although half of Australians are confident or very confident that they'll have a comfortable retirement, a significant minority (about 40%) are not confident, or concerned they won't be able to achieve a comfortable standard of living in retirement *
- Over a third of people say they 'probably or 'definitely' will not have enough to retire *
- The age and assets tests for the Age Pension are tightening so that if you were born on or after 1 July 1965, proposed legislation may mean you'll not be eligible for the Age Pension until you're age 70 from 1 July 2035 **, and
- From 1 July next year, superannuation contributions limits are becoming less generous
* Australian National University 'Ageing and Money' poll October 2015
** www.humanservices.gov.au
Perhaps Australians overall have realised the extent of their own savings problem in that 71% of people aged 45 years and over are intending to retire at age 65 and 23% at age 70 *.
But if you're under 35 today, you have one huge advantage that older generations don't have and that's oodles of time.
It doesn't matter if you're a 25-year-old with $18,000 or less in super today. If you can compound this at between 8% to 10% per annum and receive, say, $335 in employer contributions every month (after contributions taxes) into a shares-focused superannuation account, this could grow to $612,000 at age 65.
Now imagine for one moment that a deliberate decision was made to not neglect 'future you' and 100 shares in Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) were purchased at $15 today in addition to the regular employer contributions to super.
The additional purchase of around $1,500 in Soul Pattinson shares may mean an additional $54,000 to this person's retirement fund at age 65 if the stock averages around 9.3% per annum. The stock, by the way has averaged 22.68% per annum since the beginning of 1990.
Tell me that won't make a difference.
It will take a sacrifice to save though: don't buy lunch every day and give up on the regular coffee.
The more you do this, the more your 'future you' will be very thankful.
But you need to make a start if you haven't already done so.
Don't be like a young work colleague of mine who turned up in the carpark the other day in a brand spanking new Audi. It kills me that she bought a luxury German vehicle over something more mundane.
I won't go through the opportunity cost of such a purchase to her personal balance sheet, but you can read about the opportunity cost of buying a Nissan Patrol here.
Foolish takeaway
Regardless of your age, the simple matter is that you'll be better off by saving more. Period.
Allocate your savings to a long-term investment plan, and without a doubt, you'll be far more confident that you'll have enough.
Don't neglect your 'future you' and to get you started, here are three 'new breed' blue chips for you to consider buying today.
