Many Americans are inching closer and closer to retirement unsure of whether they have saved up enough to live comfortably during their golden years.
Ladenburg Thalmann Asset Management CEO Phil Blancato told FOX Business Network’s “Making Money with Charles Payne” Wednesday that the power of compound interest should not be underestimated when it comes to preparing for the future, and could boost your savings “exponentially.”
“People just don’t understand that over time, whether it’s an 8% or 10% or 12% rate of return, your money can grow exponentially just by investing in the capital system that America’s built on,” he said.
Blancato referred to compound interest as “the eighth wonder of the world” but also suggested Americans take their time to invest in the stock market and seek out professional help in identifying a growth strategy.
“Risk plus time equals reward,” he said. “As long as you understand the more time you have, the more risk you can take on. The stock market’s never lost money in any ten-year period.”
“More importantly, don’t be afraid to own equity,” he added. “You have an opportunity to add more equity the more time you have to get more growth, and that’s the key to this.”
Blancato added that instead of getting discouraged when markets are down, Americans should take the opportunity to add more money to their tax-free plans like 401(k)s – banking on the fact that markets always turn positive.
“Use the dips as a buying opportunity, especially the more time that you have,” he said. “You want to retire, if you can, at 66 to get your full Social Security. Complement that with a 401(k) that’s been mostly invested in equity up until your 60s and you’re going to walk away with an opportunity to have two real revenue sources.”