Time is your best friend, and your worst enemy when it comes to investments. If you have lots of time, you can allow compound interest to help you reach your goal. If you have a shorter period, then time is not on your side since you will have to substantially raise your contribution amount to reach your goal.

Investment calculations:

Assume a monthly contribution, a starting point of 0 balance and a yearly return of 8%. The goal is to have $250,000 by the age of 45. The contribution amount does not take into consideration any matching contribution you may earn from your employer. The calculation breakdown is here, and you can see the actual graphs at the end of the article below.

Though not likely to occur, if you were to start at age 20, the amount you would need to invest monthly starts at $265. However, starting to invest at age 25 is more realistic since most folks are fully engaged as adults and are more likely to start thinking about long term investments. Additionally, if you went to college, graduate after 3+ years and are now in a job offering a 401K, you are more likely to start investing on or about the age of 25. But see the difference of almost $200 in just starting five years earlier. More importantly, see the total amount needed as contribution ( to reach $250,000 amount even if you contribute for over 20 years.

$265 or $425 is a lot more palatable than $3,405 per month and that’s because of the power of time and compound interest. The sooner you start, the better off you will be. There’s no other way around it, you can’t make up more time. You can definitely make more money, but that’s not realistic for most people. What’s more realistic is to start early and to start now.

**Calculations for Age 20 to 45**

**Calculations for Age 25 to 45**

**Calculations for Age 30 to 45**

**Calculations for Age 35 to 45**

**Calculations for Age 40 to 45**

**Let’s Do this, 3 Steps you can take: **

1-If you have access to a 401k at your job, it is very likely that you have a matching contribution. The first step is to contribute enough to take the match.

2-If you are already contributing to your 401k, consider opening a Roth IRA. I’ll write an article on this later, but for now, visit __Vanguard__, __Fidelity__, __TRow Price__, or __Janus Henderson__ (formerly known as JANUS) to open an account. I have personally used all of them during my investment journey. I’ve used all of them for IRAs except for Fidelity, which my wife company uses as part of her 401k management company. All of them have access to low fees and provide target dated funds for someone starting out.

3-If you find that you don’t currently have enough money to invest, check out these two articles for additional information: __Budgeting 101__ and How to build wealth.

As always, if you need help, feel free to drop us an email.

#Invest, #compoundinterest, #FIRE #financialindependence #retireearly