Chapter 1. Why Should You Invest?

Buying this week's groceries might set you back $50 or more. As long as you live within your means, you can pay not only for your groceries, but also for your rent, utilities, and other expenses out of your paycheck. But how do you pay for living expenses when you aren't getting a paycheck—when you retire, in other words? (If you think you can live on Social Security, think again.) And what about your dream of seeing the lights of your life, Pooter and Scooter, graduate from top-notch universities? And don't forget that 20th-anniversary around-the-world cruise you and your partner fantasize about. All this is gonna take some moola—and probably a lot more than you expect.

For example, say you spend $40,000 a year on living expenses and you expect to enjoy 30 years of retirement spending at that same level. You do the math and reel in horror when you realize that you need $1,200,000 for your retirement. If you earn $50,000 a year, spend $40,000 on expenses, and save the remaining $10,000 in your mattress for 30 years, you'll have, er, $300,000. You're a whopping $900,000 short.