When I was 22 and about to graduate from college I attended a seminar about where to place investment money. A table was shown early in the presentation that I can say literally changed my life. It has been the defining philosophy of my approach to money.
The table was made up of five columns. The first column was the “Age” column starting at 18 and going all the way down to 65. The next two columns were “Annual Investment”. The last two columns were “Investment Return Total”.
Overall the columns represented two people. The first person began investing $2000 a year starting at age 18 and stopping after 10 years at age 27. From that point, after an overall investment of $20,000, that person never put in another dime.
The second person starts their investment of $2000 at age 27 and invests every year until age 65 for a total of $78,000.
With an average of an 8% return the person with the most money at age 65 was the first person who started at age 18.
In fact, despite all the money that the second person puts in every year, they are never able to catch person number one.
That is the power of compounded interest.
I remember seeing that and being completely blown away. I had absolutely zero money saved or invested at that point, but I resolved at that moment that I was going to get started immediately because I was already four years behind.
I also understood from the table that the absolute most important money was the money that was put in early. As many of those dollars that I could put in were the ones that were going to be supercharged and make the difference 40 years down the road.
I can say that overall, by any measure, it has been successful. I’m not quite 65 yet but I’m well ahead of that table and if what I read online is correct I’m ahead of most of my peers.
You can find the table that I talked about online or it is easy enough to create it on your own with a spreadsheet program. I actually encourage you to do it.
If you are behind, don’t get down. It is never to late to start saving. You do what you can. But pass along lessons, especially to those who are younger. You won’t become fabulously wealthy, but you will have security and peace of mind.
As always, if you are looking for a gift for the young reader in your life, you can find some great children’s books on Amazon. Just go to these links The Desert Fairies of Oylara, The Rainforest Fairies of Oylara, and The Artic Fairies of Oylara and order them.
Additionally, check out this very cool podcast on Spotify called Gen X Dad and his Gen Z Teens. Entertaining!
Finally, check out some pretty cool music on YouTube if you have a few minutes: Introduction , Mosh, Smoke, Watch Out , and First Day Out. Enjoy!
Patient and Disciplined Saving 