 Good day, fellow investors! Last weekend the story was all about the royal wedding. However, in the personal finance world, as Meghan Markle is 46, it went about how much should you have saved up till you are 45. And then, as Fidelity's number is two salaries up till 45, a lot of comments were related to that it's easier to marry a British prince than to have saved up so much. Let's see a little bit what are the stakes in saving for retirement at a young age and see whether that is something for you or not and what is the other option. The Fidelity two-time salary rule by 45 comes from their plan of how much you should save per year in order to reach a comfortable retirement, where a comfortable retirement means that you should have 10 times your salary saved by age 67. The way to get there according to them is by the following assumptions. Saving 50% of your salary, invest more than 50% of that in stocks over time, retire at 67 and plan to keep your previous lifestyle. So is that something you can do? Let's break a little bit of the myths from Fidelity's plan but also find something out that's perfectly correct from what they say. The first thing I want to discuss is having the goal to retire at 67 and I think that really, really sucks. And I'm very inspired by John Goodenau, professor at the University of Texas at Austin and co-inventor of the lithium ion battery that he invented a long, long time ago. But he's still now at 94, leads a team of scientists and still works at the university at 94. So I'm very inspired by him because he is doing something he loves and he never retired. And that's also my plan. I hope to never retire because I hope to continue to do what I love and that this is what I love investment research analysis and sharing my knowledge. So I think I'm on a good path there. So I'm not that much concerned about retirement and that's something you should also see for yourself. Is it so important? Is it smart even to give 40 years of your life to a job that you don't like so that you can retire at 67? That's something we really should think about and that's something that comes first before how much you save and how much you invest. If you don't like your job, try to find something that you love, build a business on it and then that business will allow you to retire on the business. Not so much on how much you save and that's a different story and perhaps a smarter story. So food forethought for you and I'm looking forward to read the comments to see where you are and whether you can have such a plan in life opposite to saving and depending on your investments to retire and working such a long, long time with all the uncertainties that come along that like getting fired, illnesses and who knows what else can happen in a long period of time. Number two, saving 15% of salary is really, really difficult because if I use the 40k average starting salary between the ages 25 and 34 in the US then everybody should save about 6000 in the young age per year. However, the average US personal saving rate is just 3%, not 15. Of course, these are the averages and the top 1% of income saves around 30%, top 1 to 10% between 10% and 15% and the bottom 90% save much, much less. So those averages are distorted but nevertheless are extremely low. This means that on average no American will have a comfortable retirement. So you have to see whether it's worth it to save 50% of what you earn now to have a comfortable retirement at 67. So if you are 25, that's 42 years from now. And the question is okay, I can spend those 6000, I don't know, travel the world while I'm young and then live of social security at 67 or I should do nothing for 42 years, save, save, save and then live okay by 67. I remember an article that I was reading from an older investor, he's now 72, and he said that his wife still necks him about that he didn't want to buy electric window rollers in his car to save for retirement. So they were driving a car without airco, without anything for 45 years so that they could live well in retirement. They are living well now but somehow I felt that he regretted not spending a little bit more in earlier days. So that's also something you have to consciously make the decision and accept financial responsibility for what you do. Saving, yes, will lead you to great comfortable retirement but you have to do it over a long period of time and stick to it. Let's see the numbers. And here is something very interesting. Return on investment is not even that important. If I invest 50% of my 40k salary every year for 42 years and get a 7% return, 1.5% wage increase per year, the total sum at year 42, that's when I'm 67, is 1.8 million, which is 22.5 times the 80k salary at age 67. However, if the return is just 5% then it falls to 1 million, while if the return is 4% it falls to 829,000. So it's a big difference but it's enough, enough, and largely enough to retire comfortably. So that's also something you have to see. Okay, I get my social security but the key is there not so much in the return. It will be around from 4% to 10% over the next 42 years. The key is in the savings, the discipline. The key is in not taking money out of the pot due to divorces, illnesses, college tuition, kids, kids' expenses, crashing your car, roof leaking, changing something on the house, big expenses that come every few years. And the key is when you don't do that, then okay, then you can really stick to what Fidelity says, 10%, 15% savings, investing constantly over time, dollar cost averaging, taking advantage of ups and downs. This also implies you are never fired. This also implies you are never without a job over 42 years, which when you sum it up are very, very unlikely scenarios for most people. Something always happens somewhere because that's life. So that's also some food for thought to think about and how to approach investing also in that way. You have to think about the long time horizon but really think also about all the variables that disrupt Fidelity's picture. So I must say that Fidelity's story is absolutely correct. If you invest even in index funds, their low cost index funds, 15% of what you save over long term, you will do well. How well depends on the return but you will definitely do well. The second point is where I don't disagree is the really, really high assumption of 15% saving rate constantly over time. If you started 45, the picture changed significantly because you lose the first 10 years of compounded interest. If you take out some money at 44, big change in picture. So Fidelity doesn't calculate that we are all human and things change and there is also the decision what's more important now, spending now or spending when you are 67. So that's something you have to see, take responsibility for your life. Fidelity is really giving here everything on a silver plate. They say do this, do this and you will do well and I must say I agree with them because it's really simple. 800,000 or 1.8 million, it's a big difference but if you are not into investing then 4% it's also great return and the treasury yield is also yielding 3% now so that those are okay returns for most people. Thank you for watching I'm looking forward to your comments on this topic. Very interesting a step before investing so very important and perhaps even more important than picking the right stocks. Thank you for watching and I'll see you in the next video.