A monthly investment of $100 over the next 10 years—a total of $12,000—would grow to $283,973 after 50 years, assuming an average annual return of 7%, net of fees. By contrast, waiting 10 years and then investing $100 a month for the next 40 years—$48,000 in all—would grow to just $264,012. In this example, that would be an extra $19,961 for the investor who started early.
In the real world, investment performance varies from year to year. Also, in the real world, taxes could factor into the final results. It’s important to remember that investing involves risks, including the possible loss of principal. All of your investment decisions should be made based on your specific financial needs, objectives, goals, time horizon and risk tolerance, which may change over time.
While the example shows the value of investing early, your potential to build wealth is even greater if you start early and continue investing throughout your earning years.
It’s never too late to start investing, but starting sooner may make reaching your financial goals considerably easier – and cheaper.
To quote an old Chinese proverb, “The best time to plant a tree was 20 years ago. The second best time is now.”