Early Investor Earns Early Retirement

Time is the greatest ally that an investor could ever have. As an investor, you will make most of your money through compounded interest and the earlier you start, the more compound interest you can earn.

Let's look at an example. For this example we are going to assume that two different people can both start investing at 12% interest for a continuous period of time. The first person, Charles, is going to start investing $2,000 per year at the age of nineteen until he is 27, at which point he will stop adding to his investment. The second person, William, is going to wait until he is 27-years old before he starts investing his $2,000 per year. Although, William will be continuously adding $2,000 per year to his investment until he is the age of 65.

So, Charles has a total investment of $16,000 (2,000 per year for 8 years) and William has a total investment of $78,000 (2,000 per year for 39 years). However, by the time both investors reach the age of 65, Charles will have $2,288,996 and William will only have $1,532,166. This is a difference of $756,830!

However there is a tradeoff. $2,000 per year is a lot more money to a 19-year-old than it is to a 27-year-old. But if you can afford to invest $2,000 per year, you should. Even if $2,000 per year is outside of your budget, investing any amount you is better than investing nothing.

The reason that Charles made so much more money from his investment is solely because he started investing eight years before William. Charles earned eight years more compounded interest with his investment. Furthermore, it would take more than a lifetime for William's investment to catch-up. This is just a simple example explaining the overwhelming benefits that an investor can utilize by starting early.

Nick Tart is the editor of four main sites for Worldwide Marketing Solutions. One of which is Home Income News. HomeIncomeNews.com is a one-stop resource to will help you accomplish your personal, financial goals. Please check out HomeIncomeNews.com if you enjoyed reading this article.

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