How much to save to reach $1 mill by age 65

This is how much you would need to save each month to accumulate $1 million by age 65 if you began:

At age 20 $189.59 per month (at 8% annual returns)
At age 30 $435.94 per month (at 8% annual returns)
At age 40 $1,051.49 per month (at 8% annual returns)
At age 50 $2,889.85 per month (at 8% annual returns)
At age 60 $13,609.73 per month (at 8% annual returns)

The dominant determinant of lifetime investment outcomes is. . . .

The dominant determinant of lifetime investment outcomes is not investment performance, but investor behavior.

It's Time In the Market, not Timing the Market that Creates Wealth over Long periods

This chart shows how a $10,000 investment would have been affected by missing the market's top-performing days over the 20-year period from January 1, 1989, to December 31, 2008. For example, an individual who remained invested for the entire time period would have accumulated $50,455, while an investor who missed just 10 of the top-performing days during that period would have accumulated only $26,006. This hypothetical example does not represent the performance of a specific investment.

Source: Standard & Poor's. Stocks are represented by Standard & Poor's Composite Index of 500 Stocks, an unmanaged index that is generally considered representative of the U.S. stock market. Past performance is no guarantee of future results. Investors cannot directly invest in an index.

Take advantage of the Miracle of Compound Interest

Why You Need to Diversify

This chart (produced by Blackrock) shows annual returns by asset class (i.e. stocks, corporate bonds, Treasuries, real estate, International stocks, small company stocks, etc) from best performance to worst performance from 1988 through 2008. As you can see, there's no clear pattern in any given year. It is impossible to predict with accuracy which assets will have the greatest returns from year-to-year. As a result, many investors, including myself, invest with a strategy of diversification -- owning virtually everything (US and International stocks, US Govt/International and Corporate bonds, real estate, gold, natural resources, etc) and hold these investments for very long periods of time. The portfolio should be adjusted as needed as the investor's financial situation changes and when his/her portfolio shifts significantly from the target asset allocation.

Remember Why You are Investing

Remember that your plan is based on your goals, not on your market predictions. That’s a good thing because you’re in control of your goals, but you’re not in control of the market. So if you don’t need to chase higher returns, there’s no reason to do so.

Retirement Investing

What do you do with your investments when you’re already in retirement?
It’s not about a “retirement date.” It’s about life expectancy. So even if you’re 65 years old, your life expectancy could be 85. So your time horizon is 20 years and stock market investments deserve a place in the asset allocation. Even if you’re 85 years old, the money could be a legacy for children and grandchildren. So the investments should be allocated with them in mind.

Following Your Emotions is a Sure Path to Financial Failure

There are many well-documented psychological biases which adversely affect our financial decision-making and which we are all occasionally subject to.  If you know what they are, you are probably less likely to be adversely affected by them.  Here's a list of several of them:  

	Catastrophizing - Looking to the future and anticipating all the things that are going to go wrong. Because we believe something will go wrong, we make it go wrong. Mental Accounting.  This is the tendency to value some dollars less than others.  One example of this is the "House Money" effect: if you are gambling at a casino and you have been fortunate enough to win, you might tend to be more risk-seeking with your earnings than you would be with your principal.
	Loss Aversion.  This is the tendency to feel more pain by losing money than you would feel satisfaction in gaining an equal amount of money.
	Myopic Loss Aversion.  This is the tendency to focus on avoiding short-term losses, even at the expense of long-term gains.  For example, this explains why people tend to buy insurance policies with low deductibles and low limits, despite it being opposite to what is clearly in their long-term best interests (i.e., most people would be best served with high deductibles and high coverage limits).
	Sunk Cost Fallacy.  This is the tendency to "throw good money after bad."  It is related to Regret Aversion and Loss Aversion.
	Status Quo Bias.  This is the tendency to want to keep things the way they are.
	Endowment Effect.  This is the tendency to consider something you own to be worth more than it would be if you didn't own it.
	Regret Aversion.  This is the tendency to avoid taking an action due to a fear that in hindsight it will turn out to have been less than optimal.
	Money Illusion.  This is a confusion between "real" and actual changes in money (i.e., time value of money and inflation effects).
	Bigness Bias.  This is the tendency to pay more attention to big numbers than small numbers (e.g., we are more impressed by the fact that a particular mutual fund had a 50% return last year than we are discouraged by the fact that the same fund has an expense ratio of 3% and a sales load of 5%).
	The Law of Small Numbers.  This is the tendency to exaggerate the degree to which a small sample resembles the population from which it is drawn.  This is related to the Recency bias.
	Recency Bias.  We tend to associate more importance to recent events than we do to less recent events (e.g., during the great bull market of '95-'99, many people implicitly presumed that the market would continue its enormous gains forever, forgetting the fact that bear markets have tended to occasionally happen in the more distant past).  This is related to the Law of Small Numbers.
	Anchoring.  This is clinging to a fact or figure that should have no bearing on your decision.  Often, we use an initial value as a "starting point" in decision making.  Even if the initial value was a totally random uneducated guess, we tend to be biased towards it.
	Confirmation Bias.  This is the tendency to look for, favor, and be overly persuaded by information that confirms your initial impressions.  Conversely, we tend to ignore and dismiss information which tends to disprove our initial impressions.
	Overconfidence.  This is the tendency to overestimate our own abilities (i.e., we aren't as smart as we think we are).  People tend to think that they are much better forecasters and estimators than they actually are.
	Optimism.  People tend to be optimistic about the future.  This might also be termed, "wishful thinking."
	Information Cascades.  This is the tendency to ignore our own objective information and instead focus on emulating the actions of others (e.g., the tendency to sell a stock solely because others are bidding the price down, or buying a stock solely because others are bidding the price up).
	False Consensus.  This is the tendency to think that others are just like us.
	Weakness of Will.  This is the tendency to consciously do things which we sincerely know are wrong.  A non-financial example includes smoking cigarettes (we know we shouldn't do it but many do it anyway).  A financial example includes living within our means (we know we should do it, but we often don't).
	Credulity.  While we might like to believe that we are all perfectly rational, reality is far different.  Unfortunately, we tend to be susceptible to the manipulative messages that the financial industry and the popular press put out.  Specifically, mutual fund companies tend to conspicuously advertise positive information, while suppressing negative information.  The popular press encourages conventional wisdom on investing issues because it helps them sell magazines (despite being provably wrong).