While many advantages come with age, there is one key advantage that comes with being a teenager…time. When it comes to accumulating wealth, time is one of the most valuable factors you can have on your side. Let’s take a look:
Say you get your first job at age 15.
Knowing the importance of saving, you begin setting aside $10 per week in an investment account that earns an 8% annual rate of return1. You continue this same practice until you reach age 65. Over time, you would have set aside $26,000, but with 50 years to grow and compound, your account would be worth $322,230!
Now what would happen if you started a little later?
Rather than starting to save at age 15, you procrastinate and wait until age 25.
Again, you set aside $10 per week in an account earning 8% per year1. Over time, you would have saved $20,800 (only $5,200 less than the example above) but with less time to grow, your account value is only worth $145,486.
That is less than half of what you could have had if you had started saving 10 years earlier.
Don’t miss your opportunity to take advantage of time. Start saving early and regularly, and you will be rewarded!
1 The 8% rate of return referenced above is for illustrative purposes and is not guaranteed.
Compound Interest – When the money you have saved, and the interest you have earned in previous periods, earns interest.
Article written by our guest financial expert: Jackie Weitzberg, CFP®, MSBA. President of Money MindEd, LLC., a financial education company with classes, online resources and one-on-one coaching programs for teens and young adults. www.moneymind-ed.com