I wish I could get into a time machine and tell my younger self … start investing now! The effect that time has on investments is so incredible that even just starting small, I probably could have retired at 42 instead of 52!
Not sure what I mean? Here’s an example:
At age 30 Jane starts putting $250 per month into an index fund in her company’s retirement plan that has an average 9% return. Her company matches that, so a total of $500 is going into the fund each month. Her co-worker, Tim, decides to wait until age 35, and then starts contributing the same amount to the same fund.
At age 65 Jane will have $1,346,822 and Tim will only have $851,056 – almost half a million dollars difference. That 5-year delay cost Tim half a million dollars.
Their friend Jamal starts at age 31 – only one year later than Jane. He ends up with $1,229,889 – not bad! But that one year delay cost him $116,933 – enough for some very nice vacations during retirement.
Another example:
Carol, age 40, managed to save $20,000 during the pandemic just by not traveling or going out. She knows she should invest the money, but isn’t sure how to get started. She puts it off for five years, then finally at age 45 puts it into a mutual fund that averages 9%. By age 65 it has grown to $112,088 which is great, but if she had invested right away she would have $172,462. Carol’s 5-year delay cost her $60,374.
(You can do the math yourself at calculator.net/investment-calculator.html.)
This is not to say that if you are in your 40s or even 50s it is too late – it is never too late to start! But the later you start, the more you will have to save each month, and you may need to consider things like delaying retirement or working part time for the first few years.
Not sure HOW to get started, or where you stand with your current retirement savings? I can help! I will look at your specific situation and do a projection for what you can expect at retirement. If your goal is to retire early like I did – we can look at what it takes to do that. If you are new to the idea of investing, I can give you some investment basics that will help you get started. (Pro tip – it’s not rocket science!)
I offer a free, 30-minute introductory session where you can learn more. All coaching is done via video call. Coaching can be a small investment that will pay big dividends in setting you up for financial success now and in the future. Sign up today – it’s never too late to start!
NOTE: A Financial Coach is not a Financial Advisor. If you are looking for someone to manage an investment portfolio, sell you investment products, or recommend specific investment products, please contact a licensed Financial Advisor.
