Start Now

Starting now is the greatest gift you can give to yourself.

Let me illustrate with a slightly modified example from Joel Greenblat’’s book, Common Sense: The Investor's Guide to Equality, Opportunity, and Growth.

Imagine seeing a chart with numbers for “Person A” and “Person B.”

Person A invests $2,000 each year into a retirement account starting at age 25. They make the same contribution every year in this account for 40 years until age 65. The account grows at 10% per year.

Person B begins at an earlier age. They start investing $2,000 each year at 18 and the account also grows at 10% per year until age 65. The caveat is that Person B only contributes $2,000 each year for 7 years until age 25, when Person A is just getting started. Person B only contributes 7 payments instead of 40 for a total of $14,000.

At age 65, which person has more money?

You probably can deduce that somehow Person B has more money at age 65, but it’s hard to understand how this is possible.

Person B will end up with $1,234,765 at 65 while Person A will end up with $885,185.

Person A

Person B

You can check it out yourself here.

From this example, you can see that starting now is what matters. If you take a long-term view of life, years will matter more than effort.

Starting today will help you use compounding interest to your advantage.