Investments

The Power of Starting Early

After finishing school and getting your first job, there are seemingly endless things competing for your attention. It is easy to prioritize your current lifestyle over saving for your future, and many fall victim to this temptation. Let us illustrate the importance of starting now.

Sarah finished college and began working shortly thereafter. She had always heard about the importance of investing early, so at age 25 she began investing $500/month. She did this for the first 10 years, but then stopped prioritizing retirement savings in favor of other things.

James graduated and began working at the same time as Sarah, but he prioritized his lifestyle over everything else when he was younger. Around age 35, he realized that saving for retirement is important, so he began saving $500/month and did that for 30 years, until he retired.

James invested three times the amount of money for three times the number of years as Sarah. Despite this, when they both reach age 65, Sarah would have more than $1,000,000, while James would have less than $750,000. Despite only 10 years of contributions, and a third of the investment, Sarah ended up with 25% more in retirement than James. That is the power of starting now and letting time work for you. 

And if you’re thinking, “I just started making any kind of income, I can’t save that much!”, then consider this. If you begin investing just $25/week after college, and do so until retirement, you would have just shy of $500,000. You don’t have to start big; you just need to start now.