Saddle Up
Oct 22, 2024
Compounding creates a cycle that increases in speed over time, where your money grows exponentially. That's why starting early is so important—the more time you give your money to grow, the more powerful this effect becomes. It's not about timing the market, it's about time in the market.
"Compounding - he who understands it, earns it; he who doesn't, pays it."
— Albert Einstein
Investing while you're young gives you the gift of security, freedom, and the ability to take risks and chase your dreams. Some of my favorite examples of starting to invest early.
1. Want to save enough money to fully fund a kid's college tuition?
$20 a day, for 20 years* at 7% would yield you $320,000, or $80,000 per year. *aka as soon as you get pregnant
2. If you contribute 10% of your salary to a 401k plan for 45 years (20 > 65), earning 7% growth and assuming 4% salary bumps and a 3% company match, you will have $4,500,000 by the time you turn 65. (Assuming 2024 average starting salary of $68,000).
3. That $10 per day you spend on drinks, candy and Ubers?
Otherwise invested, over 40 years at 7%, you're looking at $800,000.
4. If you invest $15,000 for your newborn child, and it grows at 7% per year, by the time they're 70, they'll have $1,700,000. (lucky 7's!)
5. A 20-year-old who invests $100 per week can be a millionaire by age 60.
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