The importance of starting investing early
When it comes to investing, starting early as possible is the best way to go. Let me show you the importance of investing early. Let’s say person A is a dividend investor that starts putting away $100 a month in the stock market when he is 20 years old.
If we use the average market return roughly 10% he would have:
Start: $0
After 10 years: $20 484.
After 20 years: $75 937
After 45 years, when he is retiring he would have: $1 048 250.
Let’s say person B is a person that wants to invest later. He thinks he has plenty of time to do that later.
He starts when he is 30 years old putting away the same amount, $100 a month.
After 35 years when is ready to retire he would have: 379 664 $. See the significant difference?
There’s an easy answer to this. Wealth grows exponentially in the stock market. Start as soon as possible.
Even if he would put away twice the amount as person A he would still have less.
After 35 years, $200/month, 10% average return: $759 328
Shocking huh? There’s a lesson to be learned from this, start investing early. I would recommend DRIP investing, let the investments go on autopilot. There are several good reliable blue chip companies that will most likely continue raising their dividends. Coca cola, pepsico, mcdonalds etc are good choices for the long term investor. I strongly recommend to reinvest all dividends in the beginning so you get a snowball effect.
I hope the numbers from this article taught you I-will-do-it-later-people a valuable lesson.