If you’re a student or in your early working years, there’s a good chance your financial future hasn’t crossed your mind much. And that’s completely understandable. You’re focused on your degree, your job, your rent, your life. Retirement feels like something your parents worry about, not you.
But there’s a quiet assumption sitting underneath all of that. That super will just handle it. That by the time you get there, it’ll work itself out.
It won’t. Not on its own. And the cost of waiting is far higher than most people realise.
The default path
Most Australians follow the same financial path without ever consciously choosing it. You get a job, your employer pays super on your behalf, you put your savings in a bank account, and you carry on. Repeat for 40 years. Retire on whatever accumulated.
The expectation is that this is enough. For most people, it isn't and the gap between what people expect their retirement to look like and what it actually looks like is one of the most confronting financial realities in this country.
Super alone, for most Australians, will not fund the retirement they're imagining. And a savings account, for reasons we'll get to shortly, is quietly working against you.
What inflation is doing to your savings right now
Here’s something most people don’t think about. If your money is sitting in a standard savings account earning 2-3% interest, and inflation is running at 3-4%, you are going backwards. In real terms, your purchasing power is shrinking every single year.
That $10,000 sitting in your savings account feels safe. And yes, it grows a little, but in 10 years, that money will buy you meaningfully less than it does today. The number on the screen increases, but what it can actually buy you quietly erodes.
Investing is how you fight back. The goal isn’t just to store money, it’s to grow it faster than inflation eats it.
The most powerful force in personal finance
Compounding is the concept that the returns on your investments generate their own returns over time. It sounds simple. The effect is extraordinary.
Here’s a real example using conservative assumptions - $300 per month invested, 7% annual return, retiring at 65:
Starting at 22:
Total contributed: $154,800
Future value: $982,000
Starting at 32:
Total contributed: $118,800
Future value: $463,000
The difference between starting at 22 versus 32 is $519,000. From just a 10 year head start. Starting at 32, you contribute less money, and you end up with almost half as much.
That is compounding. Time in the market is worth more than almost anything else you can do.
“Combining savings with compound interest works wonders” - Warren E. Buffett (Berkshire Hathaway Inc. Shareholder Letter 2019).
Why most people don’t start
If investing is that powerful, why don’t more people do it? A few reasons come up again and again.
“I don’t have enough money.” This is the most common one. The reality is that most investment platforms in Australia let you start with as little as $50-$100. You do not need wealth to begin investing. You need to begin investing to build wealth.
“It’s too complicated.” It can be. If you make it that way. But for an everyday Australian, the basics are genuinely simple. One or two diversified ETFs, bought regularly over time, is a strategy that outperforms the majority of professional fund managers. I’ll cover exactly how to do this in a future post.
“I’ll lose all my money.” The stock market goes up and down. That’s true. But for a long term investor, short-term volatility is noise. The Australian and global share markets have recovered from every crash in history and continued to grow. Time in the market consistently beats trying to time the market.
“It’s for wealthy people.” This one is perhaps the most damaging myth of all. Investing is indeed how wealthy people stay wealthy. But it’s also how everyday people can build wealth. The barrier is far lower than most people assume.
The takeaway
You don’t need to be wealthy to invest. You need to invest to build wealth.
Every year you wait is compounding working against you instead of for you. The good news is that if you’re reading this, you’re already ahead. Because most people your age haven’t thought about any of this yet.
Future posts on this site will go deep on exactly how to get started. Which platforms to use, which ETFs to consider, how to think about risk, and how to build a simple portfolio that works for an everyday Australian income.
If you haven’t already, subscribe below. This is just the beginning.
- The Financial Student