The POWER Of Investing Early

The most valuable asset you will ever have is time. And nothing could be more true when it comes to your investments. The decisions you make in your 20s often determine your experiences in your 60s and beyond.

Many people think of wealth in terms of dollars or money. I think of wealth in terms of time. Being "wealthy" to me is not a matter of how much money one has. Rather, it is measured by how much of their time they control.

To me, wealth is: The length of time I can maintain my desired lifestyle if I stopped working today. If that length of time is indefinite, only then do I consider myself "wealthy".

The amount of money this requires will vary significantly depending on the lifestyle I desire. But regardless of that desired lifestyle, I will NOT see it unless I start investing early in my life!

A practical example will illustrate how early investing is imperative to your success at having wealth (time).

Let's assume a 40 year working career, and we have two different married couples starting at age 25, Couple 'A' and Couple 'B'. Both couples can scrape together $100/month ($1200/yr) to invest in the stock market. Now I KNOW they can invest that amount, because they spend more than that each month dining out and paying for Netflix! But let's see how much those dinners and movies cost over time!

Couple 'A' decides to save the $100/month ($1200/yr) for the first 5 years out of their 40. After that, they decide to save only $50/month ($600/yr). Assuming a return of 15% annually (what a typical growth mutual fund will return on average), after 5 years Couple 'A' will have accumulated $9304. Big deal! Who cares? But after year 40, with contributing only $50/mo from year 6 on, they will have accumulated over $1.84 million due to the power of compounding!

Now all of a sudden, that Netflix bill and dinner out seem far more expensive! The payday didn't come from their saving later in life. Rather over 2/3rds of it came from the first 5 years of sacrifice!

Now let's look at Couple 'B'. They earn more money and see Couple 'A' investing early, but don't think anything of it. After 5 years, Couple 'B' then sees Couple 'A' with nearly $10,000 they can tap. So in year 6, Couple 'B' decides to start saving $100/month ($1200/yr), and they continue saving that same amount for the next 35 years.

Assuming the same rate of return, at the end of 35 years Couple 'B' will have amassed $1.22 million, or roughly $600,000 less than Couple 'A'.

Couple 'A's initial early saving of $9300 during the first 5 years resulted in a $600,000 net worth gain 35 years later.....all while investing conservatively and consistently fewer dollars than Couple 'B'. Couple 'A' invested $27,000 over the 40 years and ended with $600,000 more than Couple 'B' who invested $42,000 over the same period. Just not at the same time.

It is truly those first 5 years that best determine your probable outcome in retirement. This is not speculation. This is not guessing. This is math, plain and simple. And just imagine the outcome if it wasn't $100 you were saving, but rather $200, or $500, or over $1000 each month!

What do most people do? They claim life is hard, saying I don't have time for that right now. Only the rich can do this. Bills are due. I can't afford $100/month. Meanwhile, they eat excessively and often at restaurants, paying too much for food. They pay for movies instead of school. They hang out with friends who could care nothing for retirement while drinking expensive beers at the bar. In other words, they live for today only.

Those who live for today will have today. They will then pay for today over the remainder of their life. Whereas those who sacrifice a little today for just a few years will have abundance later in life. Abundance they can pass down to children who if not trained about wealth management, will live for today!

Time and investments provide your biggest paycheck, not your job, and not your labor. Those who start investing earlier in life will have a much better financial outcome than those who do not. The power of investing early demonstrates the value of time. And time, or your control of it, is the real wealth.