Investing Young Will Make You Rich

If I had the opportunity to change one thing about my past, it would be to start investing at a younger age. I’d travel back in time and attempt to persuade my 15-year-old self not to spend the $53.10 per week I was getting from my job at McDonald's, but instead to save it. I would explain the power of time as an investing tool and tell my younger self to be wary of unsecured debt and, of course, pancakes. Hopefully, I’d make a convincing argument.

So why not just hand my younger self the winning Powerball numbers and call it a day? Well, besides the fact that at 15 I’d be much too young to buy a lottery ticket, most large jackpot lottery winners don’t seem to fare too well.

All jokes aside, the main reason I wish I had started investing at a younger age is that investing while you’re young almost guarantees future wealth. Don’t believe me? Let’s run the numbers.

Let’s assume that my time traveling trip was a success. At 15 years old, a young Mr. GGD started investing $50 per week and continued to do so until retirement at 65. Assuming an 8.5% rate of return, how much money would I have in retirement?

Money At Retirement = $2,090,993

That's right, with a contribution of just $50 per week, I would be able to accumulate over Two Million Dollars!!! Even with relatively small contributions, starting young would pay off big time.

What if I didn’t fully listen? What if instead of immediately following the directions of my older, wiser self, I chose to keep spending and held off on investing for 5 years? If I started investing $50 per week at age 20 instead of 15 and continued until retirement at 65, how much would I have (again, assuming an 8.5% rate of return)?

Money At Retirement = $1,358,471

Over a million bucks! Still a very, very sizable amount, however by waiting just 5 years to begin investing, I would have lost out on over $700,000 in profits, ouch!

What if I waited even longer than 5 years? What if I put off investing until age 25? What about 30? 35? 40? Let’s examine the impact of waiting to invest in 5 year intervals.

If I began invested $50 per week at age…

…25 and continued until age 65, I would accumulate a total of $878,852.

…30 and continued until age 65, I would accumulate a total of $564,822.

…35 and continued until age 65, I would accumulate a total of $359,210.

…40 and continued until age 65, I would accumulate a total of $224,586.

…45 and continued until age 65, I would accumulate a total of $136,441.

…50 and continued until age 65, I would accumulate a total of $78,728.

…55 and continued until age 65, I would accumulate a total of $40,941.

As you can see, the longer I wait to begin investing, the less money I end up with later in life; and not just slightly less money. Every few years of procrastination reduces my future wealth by HUNDREDS OF THOUSANDS of dollars! I've summed it all up in the table below.

The Impact Of Waiting To Invest

So what if you’re no longer “young”? Is it possible to catch up? The short answer is, yes, however, time never stops ticking. Just as demonstrated above, the longer you wait the more it will cost you. Take a look at the following scenario:

Assume your goal is to accumulate $1,000,000 by retirement age 65. What would it take to get there?

If you started at age 20 and invested just $160 per month, you would achieve your goal of $1,000,000 by age 65.

If you waited until age 30, saving $1,000,000 would still be within reach, only now it would take about $385 per month to get there.

At age 40 it wouldn’t be too late to hit the $1,000,000 mark, but it would require close to $1,000 invested every month to succeed.

At age 50, achieving your $1,000,000 goal would still be possible, however, you’d be required to invest a massive $2,750 each and every month. That’s more than 17 times the monthly amount that would have been required had you begun investing at age 20.

I think you get the point.

So, there you have it. You can choose to invest (even in small amounts) early and often and accumulate massive amounts of money over time, or you can make excuses and procrastinate (like I did) and ultimately cost your future self thousands and thousands (and thousands…) of dollars. The choice is yours.

If you’re ready to put your money to work, then go open an investment account and start investing today!

Oh, and if you know how to get access to a time machine shoot me an email 🙂 .

Get a head start on your journey toward achieving financial independence by analyzing and tracking your income, expenses, investment performance, and overall net worth with the free online wealth management tool Personal Capital.

We use Personal Capital regularly to analyze our investment fees, track our investments, and project our net worth. We also periodically review our progress toward retirement with their retirement planning calculator.

If you’d rather do things on your own, become a subscriber today and you’ll receive our Free Financial Planning Dashboard. This tool allows you to enter your income and expenses to create a detailed budget. You can use it to track your spending habits over time or just to get an idea of where your money is going each month.  Take a look at the automatically generated charts and you may discover you have a little more cash to invest than you thought.

If you’re interested in detailed instructions on how to budget, save, pay off debt, and invest, check out The 6 Phases of Building Wealth. This book provides step-by-step instructions for working through each “Phase” in the process of achieving Financial Freedom. If you're just starting out, the information in this book will provide you with an invaluable resource. You can pick up the digital version for only $2.99 on Amazon.

Disclosure: Some of the links found on this website may be affiliate links. Affiliate links pay GGD a small commission when you click through and/or make a purchase. This is at zero additional cost to you.
Full Disclaimer/Disclosure