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“I know, I know, I’ll get to it.” If you’ve ever thought that about investing, you’re not alone. But you’re also not right. With investing, the more time you have, the better. Here’s the deal:
When you first start investing, any money you make comes from the money you invest. By the way, that’s known as your principal.
Once you’ve got some earnings in your account, guess what? The earnings start generating earnings, too. That’s compound interest. And the more time you have for compound interest to work its magic, the better. For real.
Say you start investing just $200 each month at age 20. Meanwhile, your friend is busy “having fun” and doesn’t copy your strategy until age 25.
By the time you’re both 60, you’ll have invested $96,000 and your friend will have invested $84,000. That’s just $12,000 difference in principal over a lifetime — no biggie, right?
Wrong. Because 5 more years of compound interest means you’ll have $306,476 while your friend only has $228,165. That’s a difference of $78,000.
Investing may be tough to begin — but the more time you have to invest, the better your outcomes can be. Make it a priority and take steps to get started.
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