The Law of Compounding
Start investing today. Every year you wait costs you $100,000+.
Meet two investors. Alex starts at 22, invests $300/month until 32 (10 years, $36,000 total), then stops. Jordan starts at 32, invests $300/month until 62 (30 years, $108,000 total). At 62, Alex has $1.1 million. Jordan has $440,000. Alex invested 3x less money but has 2.5x more wealth. The only difference? Starting 10 years earlier. This is compound interest - the most powerful force in finance.
Deep Dive
Einstein allegedly called compound interest 'the eighth wonder of the world.' Whether he said it or not, the math is undeniable. At 8% annual returns, money doubles every 9 years. $10,000 at age 25 becomes $20,000 at 34, $40,000 at 43, $80,000 at 52, $160,000 at 61. You did nothing - time did the work. But here's what nobody tells you: the first 10 years feel pointless. You're putting in $200/month and your account grows by... $50. It's discouraging. Most people quit here. They don't realize that 80% of the gains come in the final 10 years. The boring middle is where millionaires are made. Your only job is to not interrupt the process. Don't withdraw. Don't panic-sell. Don't 'take profits.' Just keep adding and wait.
Do This Today
This week: Open a Roth IRA at Fidelity, Schwab, or Vanguard. Set up $200/month automatic investment into VTI (total market index fund). If your employer offers 401k matching, contribute enough to get the full match - it's literally free money.
Avoid This
Waiting for the 'right time' to invest. The market drops 10%+ every 1-2 years. It's crashed 50%+ three times since 2000. And yet, $10,000 invested in the S&P 500 in 2000 is worth $50,000+ today. Time in the market beats timing the market. Always.
"The first rule of compounding: Never interrupt it unnecessarily."
Remember
- The Rule: Start investing today. Every year you wait costs you $100,000+.
- The Action: This week: Open a Roth IRA at Fidelity, Schwab, or Vanguard. Set up $200/month automatic investment into VTI (total market index fund). If your employer offers 401k matching, contribute enough to get the full match - it's literally free money.