My very first investment was in my 401K back in 2006. At this time, I was working a part-time job and I quite remember checking off the box and selecting my bi-weekly contribution. This act was a sacrifice because like every young person I wanted all of my money to spend. I later learned the power of investing through this simple act.
I selected a target date fund as my primary investment in my 401K. A target date fund is simply an investment based on your age. Retirement custodians usually select a combination of mutual funds, bonds and REITs at different ratios based on your age. The younger you are, the more stocks are included in your target date fund. The older you are, the more bonds and "safer" investments are included in your target date fund.
Fast forward, I left this part-time job and rolled over my 401K into a traditional IRA. At this time, I had no idea what a ROTH IRA was. The smartest thing would have been to roll it over to a ROTH IRA since my income was low, and I likely would not have had a huge tax bill. Anyway, back to the story. Once the funds were transferred to the traditional IRA, I remember purchasing Pfizer and Microsoft stocks. I simply picked stocks I was familiar with. I did not do any due diligence on these companies.
These two stocks, in hindsight, were excellent selections. I eventually sold all of my Pfizer shares and most of my Microsoft shares to help pay for medical school. The cash from the sale came in handy, and although I had to pay taxes on the sale, since I had no income, it wasn't much. The most powerful part of this story is that later on, once I had finished medical school. I decided to check on my IRA and was blown away. The few shares of Microsoft I owned were now well worth over $2000. Now, this was not life-changing money, but it goes to show the power of investing. This story is why I am so passionate about teaching others the power of compounding. Now, imagine if I had continued contributing to my IRA monthly. I wouldn't just have $2000; I may have had $20,000. In retirement, the $20,000 would have compounded to over $100,000.
In 2025, I urge you to begin investing and stay consistent. You will reap eventually if you do not faint.
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