Investing isn’t just for the super rich. It’s for the rest of us, too, and it’s important if you want to build a net worth for retirement. It can be intimidating, though. It’s a lot of information to take in at once. In practice, saving for retirement is usually a gradual process. Financial expert Michael Kitces breaks the process down into four phases.


Traditional investing advice sort of assumes you suddenly have $10,000 to invest with immediately, and that’s just not usually the case in practice. I wrote about my own relationship with investing recently. I went from being clueless about a 401(k) to managing my own, diversified portfolio with a few different accounts. That didn’t happen overnight, though, it took years of learning and figuring it out.


Kitces, a Certified Financial Planner, says:

The caveat to the traditional view on accumulating for retirement is that in reality, an individual’s income, spending, and ability to save vary greatly throughout life. From the impact of raises and promotions (especially significant in the early years of a career), to starting a family (and then moving on to the empty nest phase later), steady saving for retirement is not necessarily as feasible as the conventional view would suggest…..

He says that regular people who want to invest typically go through four phases with distinct challenges:

Earning more money

Saving more money

Growing their savings

Preserving their nest egg

I think this take rings true for most people. For example, I didn’t really care about my 401(k) because I didn’t earn enough money to take it seriously. I took my full employer match, but I was focused more on increasing my income than making sure my portfolio was diversified. It’s hard to think about how to save more money or grow your savings when you don’t have much money to begin with.


These priorities make sense, and thinking about investing in this way might make it less intimidating. You have a better idea of what to focus on in each stage. He goes into a lot more detail in his full post, so be sure to check it out at the link below.

The Four Phases Of Saving And Investing For Retirement via Rockstar Finance

Photo by Jon Collier.