Simply stated, the sooner that you put your money to work, the greater the benefits will be over time. In fact, when you make your investment can actually have a far greater impact on your retirement than the amount of money you invest.
Here’s an example. Suppose you started investing $100 a month in a variety of stocks when you were 25. Assuming you averaged 8% annual return on your money, you would have about $18,500 after 10 years. If you decided to stop investing and just let that sit, you would still have accumulated over $200,000 by age 65! Now, suppose you wait until you are 45 and started to invest $250 a month. Given the same annual rate of return, you would invest $60,000 and end up with only about $148,000 by age 65. Continue reading