I started investing early (as soon as I got out of college). BUT…if I can go back in time, I would tell my younger self to start even earlier. Why? It is the power of compounding interest…that’s why! Let’s take a look at why you should start investing right now.
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
― Albert Einstein
Let me show you why you should start investing early…

Start Investing Early!
Here is a table that shows you the difference that 10 years make. For our purpose, we assume an 8% increase per year. This is achievable for long-term investors, but in real life, you will have market fluctuation (but it averages out over time).
So how do our four investors stack up?
- 20-yr old investor invests $1,200 a year. At 65 he’d have invested $55,200 but his account balance will be $542,280 — that is an amazing 982% gain!
- 30-yr old investor. To have about the same amount of money at 65, the 30-yr old investor has to invest $2,700 a year (2.25 times more per year vs the 20-yr old). At 65 he’d have invested $97,200 and his account balance will be $545,590 — that is a 561% gain. Still pretty darn good!
- 40-yr old investor has to invest $6,400 a year (5.33 times more per year vs the 20-yr old). At 65 he’d have invested $166,400 and his account balance will be $552,645 — that is a 332% gain. Still a respectable gain.
- 50-yr old investor has to invest $17,000 a year (14.17 times more per year vs the 20-yr old). At 65 he’d have invested $272,000 and his account balance will be $556,754 — that is a 205% gain.
Age | Money Invested | Balance | Money Invested | Balance | Money Invested | Balance | Money Invested | Balance | |
20 | $1,200 | $1,296 | |||||||
21 | $1,200 | $2,696 | |||||||
22 | $1,200 | $4,207 | |||||||
23 | $1,200 | $5,840 | |||||||
24 | $1,200 | $7,603 | |||||||
25 | $1,200 | $9,507 | |||||||
26 | $1,200 | $11,564 | |||||||
27 | $1,200 | $13,785 | |||||||
28 | $1,200 | $16,184 | |||||||
29 | $1,200 | $18,775 | |||||||
30 | $1,200 | $21,573 | $2,700 | $2,916 | 2.25x | ||||
31 | $1,200 | $24,594 | $2,700 | $6,065 | |||||
32 | $1,200 | $27,858 | $2,700 | $9,467 | |||||
33 | $1,200 | $31,383 | $2,700 | $13,140 | |||||
34 | $1,200 | $35,189 | $2,700 | $17,107 | |||||
35 | $1,200 | $39,300 | $2,700 | $21,392 | |||||
36 | $1,200 | $43,740 | $2,700 | $26,019 | |||||
37 | $1,200 | $48,536 | $2,700 | $31,016 | |||||
38 | $1,200 | $53,714 | $2,700 | $36,414 | |||||
39 | $1,200 | $59,308 | $2,700 | $42,243 | |||||
40 | $1,200 | $65,348 | $2,700 | $48,538 | $6,400 | $6,912 | 5.33x | ||
41 | $1,200 | $71,872 | $2,700 | $55,337 | $6,400 | $14,377 | |||
42 | $1,200 | $78,918 | $2,700 | $62,680 | $6,400 | $22,439 | |||
43 | $1,200 | $86,527 | $2,700 | $70,611 | $6,400 | $31,146 | |||
44 | $1,200 | $94,745 | $2,700 | $79,176 | $6,400 | $40,550 | |||
45 | $1,200 | $103,621 | $2,700 | $88,426 | $6,400 | $50,706 | |||
46 | $1,200 | $113,207 | $2,700 | $98,416 | $6,400 | $61,674 | |||
47 | $1,200 | $123,559 | $2,700 | $109,205 | $6,400 | $73,520 | |||
48 | $1,200 | $134,740 | $2,700 | $120,857 | $6,400 | $86,314 | |||
49 | $1,200 | $146,815 | $2,700 | $133,442 | $6,400 | $100,131 | |||
50 | $1,200 | $159,856 | $2,700 | $147,033 | $6,400 | $115,054 | $17,000 | $18,360 | 14.17x |
51 | $1,200 | $173,941 | $2,700 | $161,712 | $6,400 | $131,170 | $17,000 | $38,189 | |
52 | $1,200 | $189,152 | $2,700 | $177,565 | $6,400 | $148,575 | $17,000 | $59,604 | |
53 | $1,200 | $205,580 | $2,700 | $194,686 | $6,400 | $167,374 | $17,000 | $82,732 | |
54 | $1,200 | $223,323 | $2,700 | $213,177 | $6,400 | $187,675 | $17,000 | $107,711 | |
55 | $1,200 | $242,484 | $2,700 | $233,147 | $6,400 | $209,601 | $17,000 | $134,688 | |
56 | $1,200 | $263,179 | $2,700 | $254,715 | $6,400 | $233,282 | $17,000 | $163,823 | |
57 | $1,200 | $285,529 | $2,700 | $278,008 | $6,400 | $258,856 | $17,000 | $195,288 | |
58 | $1,200 | $309,668 | $2,700 | $303,165 | $6,400 | $286,477 | $17,000 | $229,272 | |
59 | $1,200 | $335,737 | $2,700 | $330,334 | $6,400 | $316,307 | $17,000 | $265,973 | |
60 | $1,200 | $363,892 | $2,700 | $359,677 | $6,400 | $348,523 | $17,000 | $305,611 | |
61 | $1,200 | $394,300 | $2,700 | $391,367 | $6,400 | $383,317 | $17,000 | $348,420 | |
62 | $1,200 | $427,140 | $2,700 | $425,592 | $6,400 | $420,894 | $17,000 | $394,654 | |
63 | $1,200 | $462,607 | $2,700 | $462,555 | $6,400 | $461,478 | $17,000 | $444,586 | |
64 | $1,200 | $500,911 | $2,700 | $502,476 | $6,400 | $505,308 | $17,000 | $498,513 | |
65 | $1,200 | $542,280 | $2,700 | $545,590 | $6,400 | $552,645 | $17,000 | $556,754 | |
$55,200 | 982% | $97,200 | 561% | $166,400 | 332% | $272,000 | 205% |
Well, which investor would you like to be? Clearly, you want to be the one that started investing early — compounding interest at your service!
Another Way to Visualize
Instead of having the four investors invest different amount to achieve the same goal, what if they all invest $1,200 a year at 8%?
20 | 30 | 40 | 50 | |
Total Balance at 65 | $542,280 | $242,484 | $103,621 | $39,300 |
Difference vs 20-yr old | 2.24x | 5.23x | 13.80x |
The 20-yr old investor is 2.24 times richer than investor that started at 30, 5.23 times richer than the one that started at 40, and a staggering 13.8 times richer than the one that started at 50.
What If the Growth Rate is Higher?
Well, what happen if the growth rate is 12% instead of 8%? The answer will blow your mind!
Here’s the comparison of our four investors at 12% growth rate.
20 | 30 | 40 | 50 | |
Investment Per Year | $1,200 | $3,800 | $12,100 | $43,000 |
Difference vs 20-yr old | 3.17x | 10.08x | 35.83x | |
Total Invested | $55,200 | $136,800 | $314,600 | $688,000 |
Total Balance at 65 | $2,045,861 | $2,061,875 | $2,037,325 | $2,058,998 |
% Gain | 3,706% | 1,507% | 648% | 299% |
And here is the difference in wealth accumulated if they invest the same amount.
20 | 30 | 40 | 50 | |
Total Balance at 65 | $2,045,861 | $651,118 | $202,049 | $57,460 |
Difference vs 20-yr old | 3.14x | 10.13x | 35.60x |
35.60 times difference…that is insane!
..,.Now imagine every parents invest $1,200 a year for their kids…let’s start them early.
Bottom Line
Start investing as soon as possible. When you start investing early, you are taking advantage of compounding growth and your money will growth exponentially faster.
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Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.