Personal Finance Essentials
Start Now – and Never Stop
The Sooner You Start Saving,
The Less You Need to Save
Time Is Your Most Powerful Financial Asset
The sooner you start saving, the less you need to save. To accumulate $1 million by age 65, you need to save just $158 per month if you start at age 25. If you don’t start saving until you’re 50, you need to save $2,413 every month. And if you don’t start until you’re 60, you’ll need to save almost $13,000 per month, or $156,000 per year. The sooner you start to save, the better. Start now.
The math behind this is compounding – your money earns money, and that money earns money too, growing exponentially over time. Even modest savings, given enough time, can produce extraordinary results.
Time in the Market Beats Timing the Market
Consider two investors, Jack and Jill. Jack begins investing at age 18 and contributes $5,000 a year for just eight years, then stops completely. His first-year contribution is invested for 47 years. Jill starts contributing the same $5,000 at age 26 – the exact year Jack stops – and invests every year without interruption until age 65. That is 40 years of contributions versus Jack’s eight. Yet Jack ends up with more money. The reason: he started sooner.
Time is the most powerful force in investing. The earlier you put it to work, the more wealth it creates. This is why there is no such thing as a perfect time to start – the best time is always now.
