23 Things I Wish I Knew: #6: Compound Interest is Your Best Friend
At age 22, I started stripping. For the next fifteen years I worked off and on as a dominatrix, porn actress, and escort.
Now I’m 49.
Here are 23 things I know now that I wished I’d known then:
#6: Set aside money for retirement NOW. Put the awesome power of compound interest to work for you.
Adulting isn’t easy, and working in the sex industry can sometimes feel like a state of arrested development, where we don’t feel connected to “normal” life. But starting a retirement fund can go a long way towards your security, prosperity, and peace of mind. Baby steps taken today mean you'll be miles ahead later on.
If I have one regret from my decade as a 20-something, it's that I didn’t invest back when my whole life was stretched out in front of me. I didn’t start saving until I was in my thirties, and even then, I needed a lot of handholding. The biggest reason for this? I was afraid that as a sex worker, I couldn’t ask for help. That does not have to be you.
I should say first: Save up an emergency fund. This is money tucked away that you don’t want to spend, but you will if you have to, that can carry you over any slowdowns in your business. Three months of basic expenses is a good rule of thumb. Once you have that rainy day fund built up, you’re ready to put cash into an investment fund that you don’t plan to touch.
Investing even $20 dollars a week can get you started—that’s less than $3 a day. If you set aside $100 a month and earned average of 7%, the average market return for the US stock market over the last century, you’d have $545,000 sitting in that account in 50 years. Not bad for less than the cost of a latte.
Don’t make the mistake of believing you can’t invest if you don’t have $500 or $1,000 as a starting balance. You can open a brokerage account at Fidelity or Charles Schwab for no cost with zero balance. I recommend looking into opening a retirement account, such as an IRA, which offers important tax benefits, and Fidelity will waive the fees if you invest automatically. Simply walk into a branch or call to get started.
Likewise, you don’t need fancy advice on what to invest in. These firms have investment advisors that will help you select index funds that carry the lowest fees and track the broader markets. Index funds have repeatedly been shown to outperform high-end hedge funds—if you don’t believe me, believe Warren Buffett.
Do, however, be mindful of transaction fees or commissions. Schwab and Fidelity currently allow you to purchase index funds directly, so you don't pay a transaction fee, but ask before you make your first trade. If you're buying $100 worth of an index fund and pay a $7.95 commission, you're down nearly 8% before you even get started.
If you have tax questions as a self-employed sex worker, I have a recommendation for a sex work-friendly tax advisor: Lois Miskinis, lois@loistax.com. She's been a tax advisor for more than 30 years. She's also is the mom of the Most Excellent Mistress Lori A. St. Kitts, author of the sex worker's tax bible The Tax Domme's Guide for Sex Workers and All Other Business People.
Whatever you do, don’t sell yourself short thinking that you can’t invest because you’re new at this, you only have a few dollars, or because you’re a sex worker. None of those facts is an impediment. Skip the latte and get started saving today.
I write about all aspects of sex work and money in my new book, Thriving in Sex Work: Heartfelt Advice for Staying Sane in the Sex Industry, now available in ebook format and paperback.
Until next time-- be sweet to yourself.
Love-- Lola D.
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