Is your frugality not turning into riches? Here’s a possible reason why

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As Social Security among young people is treated as a pipe dream and more and more Americans nearing retirement age don’t seem to see a financial rainbow at the end of career tunnel, many conservative spenders and savers across the nation wonder why they haven’t seen the wealth accumulation from years of hard work result in something larger. What gives?

CNBC’s Jill Cornfield explains exactly why you’re so far off from the retirement track of your dreams, and the answer why is pretty obvious. “Savings alone can’t get you there,” writes Cornfield, “investing can.”

Now the word “investing” alone is enough to make some people shudder and immediately become uncomfortable. Investing (and investing smartly) is something many Americans will never learn about in school, nonetheless in most universities outside of a degree program such as finance. However, learning the principles behind smart investing is something even the most financially literate among us need to gain a strong understanding of.

Cornfield states that the “game-changer is compound interest, which helps you build wealth when you invest.” She continues to point at that while holding onto an emergency fund of cash is fine, “cash will not help you keep pace with inflation.” Inflation for those of you who don’t know, is when the government via the Federal Reserve prints more dollars in order to artificially stimulate the economy. This means that every year depending on the rate of which the Federal Reserve is printing cash, the overall value of your money sitting in a savings account loses its value overall. This is why making your money make you money (strange thought for some, but hold on) is so vital to creating more wealth using your current capital.

She continues stating that the “money you can amass through the stock market makes the difference between a Warren Buffett and an average person who has good savings habits but shies away from investing.

So where do you start if you are absolutely new to the world of investing? Cornfield states the key for aggressive savers who are financially responsible to “start small.” She points out that if “you want to try investing on your own, you can use a robo-adviser. Some, like Acorns or Betterment, let you invest in fractional shares.” You can even start by opening an “individual retirement account through a major provider such as Fidelity, Schwab, or Vanguard.

So where do you stand on your retirement goals? Investing can be the strongest method to retirement for middle income earners, so the opportunities to learn and grow your wealth are available, if you so choose to take that next big step!