Start Investing

At what age should you start investing?  If you are asking this, you are already behind.  As a 20 something, I did not get serious about investing.  Once I hit 30, I had no idea what to do.  A good financial advisor would do you wonders.  The earlier you start, the better your retirement will be. 

Let’s say you invested in a mutual fund that gives to a 5% return annually.  Your initial investment is $2,000 and you are ago 20 with retirement at age 65.

 

Start Age	One time investment	Percentage rate	Total at age 65
20	$2,000	5%	$18868
30	$2,000	5%	$11583
40	$2,000	5%	$7111

 

Can you see how delaying your retirement can cost you big time?  The 20 year old would have $7285 dollars more than the 30 year old and $11757 more than the 40 year old.

This is the magic of compound interest.  Let’s take another look at the same scenario, but this time you invest and extra $100 per year.

 

Start Age	Initial Investment	Annual investment	Percentage Rate	Total at age 65
20	$2,000	$100	5%	$35737
30	$2,000	$100	5%	$21167
40	$2,000	$100	5%	$12222

The $20 year old make a total investment of $6,600.  The 30 year old would invest $5,600 and the 40 year old $4500.  The 20 year old would have $14570 more than the 30 year old and $23515 more than the 40 year old.

The sooner you start investing, the better.  Remember that the market is volatile.  That means you will have gains one day, and losses the next.  Investing is a long term practice.  Take a look at your investments every month, but not every day.  The myth of the day trader getting rich is nothing more than a myth. If anybody can do it, then all of us would be rich.  A steady consistent approach and good financial advice will set you off on the path to a rewarding retirement.  Just don’t wait any longer.