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A golden opportunity awaits children who are home for the holidays. Parents can’t help it. Their unsolicited advice just comes flooding out — like a dam has broken. Enter “Steve Butler — Retirement Planner,” whose traditional year-end advice, focused on young adults, just adds grist for the mill. So, listen up.

Anyone who has a job that offers a 401(k) should be contributing something even if they have school loans to pay back. If they are in the “gig economy,” they should start an IRA or a “Solo 401(k).” Saving at least something should never be a problem. There’s always a way to live more frugally. Make your own coffee and lunches, give home-made pies for presents like the Amish do — the habit of saving money can become a game. Do whatever it takes to set the stage for saving at least $100 a month or more.

What does that accomplish? And how? Well, it starts with the “magic” of compound interest coupled with long-term stock market average annual returns of 10 percent per year: $1,000 in a mutual fund today stands a good chance of earning $100, so the next year there will be $1,100 earning 10 percent to add $110 to what will then total $1,210 — and so on. This process is called “compounding,” and it enables the original $1,000 to double about every seven years. Do the math. The $1,000 builds to roughly $64,000 in 42 years with no additional contributions.

We just illustrated what happens with a single $1,000 investment. In future years, each additional annual thousand starts its own clock ticking with just one less year of time until retirement. So, a monthly contribution of $100 ($1,200 per year) will accumulate at the following rate: 10 years/$20,665; 20 years/$76,569; 30 years/$227,932; 42 years/$780,000.

All these numbers are said to be “linear,” so $1,000 per month means that you would multiply all of the above numbers by 10. That means you have $206,650 in 10 years, etc.

By the way, if you’re curious, the 42-year number is $7.8 million — $780,000 times 10. If $250 a month is more doable, multiply by 2.5 — for $500 per month, multiply by 5. And so on.

Now then, let’s talk about risk. The reason investors can reasonably expect roughly a 10 percent average annual return is only because of something called “the risk premium.” Anyone who ventures beyond the guarantee of a savings account or money market fund has to expect periodic years of disappointing results — sometimes for longer than a year or two. The “invisible hand” of economic forces rewards people who can occasionally endure a downdraft in their investments. This is the “premium” or reward for taking some risk. If it didn’t exist as part of the human condition, nobody would ever have an incentive to subject their money to risk.

How anxiety-provoking can it be? Well, we’ve had eight major stock market “crashes” just since 1970, so with the benefit of hindsight we can identify the day the market hit bottom in each case. The total return for the 12 months following the lowest day was a 39 percent gain in value. That was just the average. The worse the crash, the greater the “snap back.”

Moreover, in the past 31 years, the stock market has had 20 years when it has gained more than 20 percent (including 2017) — and just two years when it has lost more than 20 percent for the year.

In the face of these confidence-inspiring statistics, any young person just starting a lifelong investing experience should understand another fundamental: As goofy as it may sound, the market serves regular investors better if it crashes periodically. That’s because new inbound money during those downdrafts buys mutual fund shares at cheaper prices — shares that will eventually be sold for much more years later to support an eccentric personal lifestyle in retirement, or maybe just to provide a lifeline while between jobs.

As for investment choices, it doesn’t matter. Spread the money (“diversify” is the term) across different types of mutual funds to create a “path of minimum regret” — a combined result that will look like a straight line between winners and losers. There is no right answer. Today’s relative winners are sure to be tomorrow’s losers and vice versa. In the end, they all go up, but at different rates.

Never try to time the market by bailing out into cash, and don’t watch money commentators on TV. They will just prompt doubt to set in — a sentiment leading only to analysis paralysis. Just set it, forget it, and enjoy the New Year.

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