4. Start small—but start. You don’t have to start by investing a large amount outside of your retirement plan options. For example, you can automatically invest as little as $50 a month into Thrivent Mutual Funds.1 This automatic investing plan is available whether you’re opening an IRA or a standard brokerage account. Through time and the power of compounding, your $50-a-month investment may contribute significantly to your financial goals.
5. Invest for the future even if you’re paying off student loans. Money might be tight, but the habit of investing is worth cultivating, and the value of time can be powerful. Your long-term returns can be significantly different if you start now rather than putting it off a few more years.
The chart below compares two hypothetical scenarios—one in which the investor starts contributing $100 a month now and stops contributing in 10 years, and the other in which the investor starts investing $100 a month beginning in 10 years and continues for the next four decades.
As the chart illustrates, over a 50-year period with an average annual return of 7%, the investor could earn more over the next 50 years in the first situation—by investing now—compared to the investor who starts 10 years from now—even though the second investor invested more money!
Keep in mind these results are hypothetical and do not represent a specific investment. There’s no guarantee your investment portfolio will match the returns illustrated here, and you can lose money investing in the markets.
The key is the power of time. By starting 10 years earlier, a smaller investment has more time to grow.
Investing—the value of time
Comparative long-term returns based on 7% average annual return with monthly compounding