I’m a Millennial With $122,108.22 in My 401(k): How Much I Contribute Every Month

How Much Do Millennials Need to Save for Retirement?

Whether you’re a millennial or not, it’s important to realize that time is one of your best assets when investing for retirement. Investing earlier and consistently allows more time for compound interest to grow your nest egg.

Check Out: How Much Monthly Income Could You Get From a $200,000 Annuity?

Justine Nelson, the founder of the blog and YouTube Channel Debt Free Millennials, shared how she grew her retirement balance to $122,108.22 by understanding basic investing concepts and making a few strategic decisions along the way.

Here are some of her tips:

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1. Consolidate Accounts When It Makes Sense and Watch Fees

In 2014, Nelson paid off $35,000 of student loan debt in 2.5 years on just a $37,000 salary at the time. Once she became debt free, she decided to start putting some of the money that was freed up toward investing.

She opened a Roth IRA and started contributing money but soon realized there was an upfront fee of 5% and annual fees of around 1.5%. Nelson also had a 403(b) account through her employer.

In 2016 she became self-employed and decided to roll over her 403(b) to a traditional IRA with Vanguard and move her Roth IRA there as well to cut down on fees.

“I wanted to take control and ownership of the funds so I chose index funds,” Nelson said in her YouTube video. “Index funds are basically a basket of stocks that aim to replicate the performance of a specific market index over time, such as the S&P 500,” she added.

2. Increase Contributions When You Can

From 2016 to 2017, Nelson was still trying to adjust to running her business and wasn’t making a lot at the time. So she contributed smaller amounts like $200 monthly or sometimes nothing at all. But her retirement balance still grew and she credits that to the simplicity and success of index funds.

“I’ve made it simple by choosing index funds that basically track and replicate the performance of a specific market index,” Nelson said.

As her income grew, she began to invest $1,000 per month and grew her total balance to over $122,000 in just a few years.

3. Assess and Choose Funds That Align With your Goals 

Nelson chose to invest in three different Vanguard funds:

• Vanguard Target Retirement 2055 (VFFVX) 

“This was a target specific to me and my age and these funds are basically a basket of stocks that also have a specific target retirement date in mind,” Nelson said. “As you get closer to that year, your funds will be reinvested automatically into more conservative funds so it does the work for you”.

• Vanguard 500 Index Admiral Fund (VFIAX)

This fund tracks the S&P 500 and she has the option to set up recurring monthly contributions.

• Vanguard Total Stock Market Index (VTSAX)

As the name suggests, this Vanguard fund tracks the total stock market and Nelson likes that it has a high overall performance rate and a low 0.04% expense ratio (the cost of managing and operating the fund).

Overall, Nelson’s Vanguard total retirement portfolio has a 9.5% return rate to date.

Learn More: 7 Things You Must Buy at Costco While on a Retirement Budget

“High-yield savings accounts are great for your short to mid-term goals, but not for retirement,” Nelson shared in her video. “Your retirement funds need to be in very active accounts to help you get the growth you need.”

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This article originally appeared on GOBankingRates.com: I’m a Millennial With $122,108.22 in My 401(k): How Much I Contribute Every Month