Getting Started Early

In your 20s and 30s you are starting to build your life and finances.  There are many competing demands on your money, student loan debt, finding a job, and building your credit.  It's easy to put off investing, but when it comes to investing, time is one of your greatest allies. Why?  When time joins forces with compound interest, your account value grows dramatically. Think of compounding as getting a return on your return. Here’s an example:

• If you are a 25-year-old wanting to have a $1 million nest egg at age 60, you would need to invest $880.21 each month assuming a constant return of 5%.
  
  
• If you waited 10 years (35-years-old) to start investing, you would need to invest $1,679.23 each month using the same assumptions.
  
  
• If you waited 20 years? At 45-years-old, you would need to invest $3,741.27 each month to accumulate the same $1 million by age 60.

The only difference between these three scenarios is the impact on the investment of combining time and compound interest. It can make a huge difference between retiring in comfort and, well...not.