By Craig Erwin, Ph.D.
Photo by Thamyres Silva on Pexels.com
My son works part-time. He saves and invests $200 in the stock market each week. If he continues to age 58 (in 40 years), he could have $2,792,806 or more (according to Nerdwallet). Not bad for a part-timer.
Of course, it’s unrealistic to believe that an 18 year old will continue to save $200 a week for 40 years. But it is also unlikely that he will keep working part-time. When he gets a full-time job, he may be able to save even more money each week. At any rate, this example demonstrates the power of starting young and saving and investing regularly.
Novice investors often think that what matters most is picking the right stocks or cryptocurrencies. But what impacts the wealth accumulated most is how much is saved, not what it’s invested in. That makes saving $200 a week look pretty smart. Of course, it helps to invest in something like stocks, proven to provide a good return in the long run. And that is what my son is doing; putting his money in low-cost exchange traded funds, full of stocks.
Many kids my son’s age spend everything they make. That makes saving impossible, let alone trying to accumulate enough wealth to retire. In fact, many people much older than my son spend everything they make. And someone who starts investing a decade later than my son did will find it much more challenging to accumulate as much as he will, no matter how much of each paycheck they save.
Starting to save and invest at a young age can make a great difference. Although it’s never too late to begin, starting early greatly increases your chances of accumulating enough wealth to retire comfortably (or early).
Are you saving enough? Have you used an online calculator to find how much wealth you’ll accumulate?
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