Did you know that if you invest USD 2,000 a year starting at age 21 and stopped at age 31, you wpould have more money at 65 than you would if you would have started at 31 and invested all the way up until 65?
Let me explain: If you start right away, you could invest a total of USD 20,000 and have more than if you wait 10 years and invested USD 68,000 (more than 3x the amount). That’s the power of compounding.
If you contribute USD 6,000 per year from ages 21 to 31, earning 9.8% per year (the average historical total return of the S&P 500 over the past 90 years) until age 65, your savings will be worth more than USD 2.8 million. If you start at age 31 and contribute every year until age 65, you’ll have almost USD 1.7 million. By waiting 10 years, you miss out on nearly USD 1.2 million!
This is no joke! If you wait until you’re 40 years old to get serious about saving and investing, your savings drop big times to only USD 690,895.
But if you, the 21 year old continue to invest USD 6,000 every year instead of stopping at age 31, you will have more than USD 4.4 million. With Other words, if you start 19 years later with your saving for retirement, you will be short a stunning USD 3.8 million!!!!
Weather you are able to invest USD 6,000 a year when 21 or start with 40, bottom line is: the longer you can let your money grow, the more money you are likely to have. Time is likely more important than which investments you pick. If you haven’t started investing, the clock is ticking. Get started now!
Sven Franssen