There is No Better Time Then Now to Start Investing

by Derek Sall on May 21, 2013

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Start Investing
How often would you say you think about your future? And, by future I don’t mean tomorrow. I’m talking 20 years from now. Heck, maybe even 40 years from now.

Do you ever think about where you’ll be living or what you’ll be doing with your life?

I understand that life is not ever going to happen exactly as we plan in, but your actions today definitely impact your future tomorrow. So what are you doing today to make your future everything that you’d want it to be?

Do You Know If You’ll Have Enough?

If you’re like most, I suspect that you have some sort of retirement account set up through work, so it makes you feel good to know that a portion of your paycheck is going into an investment account each month, but do you know anything beyond that?

With these contributions, how much money do you expect to have when you retire? Will it be enough? What if the market tanks? Do you have any other sources of income for your retirement years? I’d say that maybe 10% of the population really have a clue if they’ll be ready financially when they retire. I urge you to be part of this 10%.

Start Investing Early

Compound interest is an amazing thing. In fact, Einstein himself referred to it as the eighth wonder of the world! When compounding interest first starts out, it really doesn’t seem all that impressive. Your $100 investment grew 10%, so now you have $110. And then next year it’s $121. Big whoop right? But, when this happens again and again and you start seeing 10% gains on $100,000, you just increased your fund by $10,000! Now that’s exciting!

If you’re reading this and are fairly young yet, read this paragraph carefully. It’s about investing early. If I asked you how big of a deal it would be to wait until you’re 25 to start investing, you’d probably shrug your shoulders and say, ‘no’. After all, 25 is still pretty early compared to a full life span of 75 years. But, let’s make a comparison here.

There are two boys, Jim and Paul, both of them are 18 years old. They both understand the importance of investing early, but only Jim actually starts. For 7 years, he contributed $2,000 into his retirement account and then decided to stop investing. His friend Paul didn’t invest right away, but started at about the time that Jim stopped. He also decided to invest $2,000 a year, but guess what. After 40 years of investing, Paul’s fund never caught up to Jim’s!

Even though Jim had stopped investing a long time ago, because he started so much earlier the compounding interest had longer to work and grow. So, even though Jim only invested $14,000 vs. Paul’s $80,000, Jim was still more wealthy in the end. It’s very important to start investing early.

I realize that you’re probably not 18 years old, but let’s say you’re 35. It’s better to start now than when you’re 45! You might be investing some money, but maybe it’s not enough. Up your contribution if you can! It will definitely be worth it in those later years when your interest is carrying your investments up tens of thousands of dollars at a time.

Have you started to invest? How much do you expect to have by the time you retire?

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  • Definitely start investing early! We aren’t investing as much as we’d like, mainly because of my student loans. We plan on ramping it up ASAP though.

    • I’m with you Michelle. I say you’re doing it right though. Get rid of that debt in a hurry and then pile some money into your investments! Nice job.

  • Totally agreed. Start early, and if you can’t do a lot, then do a little. Just start and do.

    • Exactly. Most of the time people just can’t start investing with a huge sum of money each month. Every little bit helps though. And with compounding interest, that $100 a month could be hundreds of thousands of dollars in 40 years!

  • MarthaJ

    True, there is no better time to start investing then today. After years of trying to
    figure out the right asset mix for a comfortable retirement, I have built a
    diversified nest egg with stocks, bonds and bullion.

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