Compound interest. Buy into a total market index fund that will get you more or less 7% on average a year. Let’s say you have a $100 extra per month (doesn’t actually matter whatever you can afford).
Sally from age 20-30 puts her $100 in every month. At the end she has about $16000. She stops adding anything, but keeps that money invested. By 65 she has $170k.
Jeff doesn’t start investing until he’s 30, but he’s consistent and does the same thing, $100 a month from 30-65. He ends up with about $165k.
What that means is Sally made more money than Jeff even though she did the same thing for 10 years that he did for 35. She just started earlier.
why would you invest in stocks?
Compound interest. Buy into a total market index fund that will get you more or less 7% on average a year. Let’s say you have a $100 extra per month (doesn’t actually matter whatever you can afford).
Sally from age 20-30 puts her $100 in every month. At the end she has about $16000. She stops adding anything, but keeps that money invested. By 65 she has $170k.
Jeff doesn’t start investing until he’s 30, but he’s consistent and does the same thing, $100 a month from 30-65. He ends up with about $165k.
What that means is Sally made more money than Jeff even though she did the same thing for 10 years that he did for 35. She just started earlier.