When playing Monopoly, if you don’t begin investing early, you’ll be forced out of the game sooner rather than later. Why? Because the bulk of your cash will be spent paying out rent to those smart enough to buy property early on.
Real-Life Money Lesson: Start investing as soon as possible
With the burden of student loan debt, high living costs and wages that aren’t keeping pace, you may think it’s impossible to start investing now. But, here’s the truth: even stashing away a few dollars a week will add up to a nice nest egg over time – due to the magic of compound interest.
What’s compound interest? This is when interest accumulates on the interest you’ve already earned on your money. So, investing now in your future self will result in greater wealth down the line.
Let’s take a look at a quick example of this with a “$250 a month strategy,” which assumes an 8% average annual investment return. Take a look at how an investment of $250 a month would grow, starting at the following ages:
- Age 25: You’ll accumulate $878,570 by age 65
- Age 35: You’ll accumulate $375,073 by age 65
- Age 45: You’ll accumulate $148,236 by age 65
Your next question may be: But what if I don’t have any money to begin investing right now? That’s ok! As the saying goes, “Where there’s a will, there’s a way.” As a first step, check to see if your employer sponsors a 401(k) retirement plan with a matching contribution. Once you find out the percentage your employer will match, ensure that you contribute at least that amount (otherwise, you’ll be throwing away free money).
Next, let technology help you automate the process of growing your money! Apps like Acorns are perfect for first-time investors who may not have a ton of extra money. By automating, you can invest even your spare change into well-diversified portfolios.
