Why I'm excited about the market's "correction" and my retirement

Most people my age are not saving for retirement. Most aren't even thinking about it. I'll be done by the time most people start saving for it. If you're out of college and aren't saving everything you can, you should. It's all about time value money.

If you were to open a Roth IRA when you get out of college and start working full time (lets say 22 years old), and contribute $5000 dollars a year every year until you retire at 65. You'll have contributed $215,000 over that time span, and if you were to invest in relatively safe fixed-income securities yielding 5% a year, that nest egg will be worth over $755,000. If you're a little more risky and were to invest in the stock market with an annual rate of return of 10%, that nest egg will be worth an astounding $3,260,000! Now if you're a very astute investor and were somehow able to wrangle an impressive 15% a year, that $215,000 will have grown to over $15,530,000!!!

Lets say that you are more like the rest of America and don't start saving until your mid thirties (we'll say 35). You'll have contributed $150,000, and those same investments would be worth only $353,000 (5%), $909,000 (10%), and $2,504,000 (15%) - quite a difference from if you had been saving from the beginning. And, if you had been smart enough to use a Roth IRA structure, all that money would be withdrawn TAX-FREE! Now that's the power of money over time.

Some of you might be wondering why I'm so excited at the market falling. Well, simply, when the market falls like it has, everything is on sale. I can go in and buy stocks, ETF's, and get in to mutual funds at 30% discounts to what I think they are valued at, and over time they'll recover and their price will better reflect their true value. Just by adding money into the market while it's down I'll be able to get some gains just by buying when everyone else is freaking out. Yes, they may lose some more value in the short term, but I'll just continue to add money and get securities at discounted prices.

Oh, and don't go telling me that the market will never be the same, and that I'll just be losing money - the market WILL recover, and we WILL be a dominant country economically again. It may take several years, but things will get better - mark my words. Economies go through cycles of boom and bust - it's natural and it's what keeps the economy in check.