If you take a penny and double it every day for 30 days, how much do you think you will end up with on the 30th day? $30? $1,000? No and no. You would end up with $10.7 million. That’s right, millions! From a penny! This is due to something known as the power of compound interest.
Many years ago when I was an undergraduate at UCLA, I attended a financial seminar where I learned about investing and the magic of compound interest. Compound interest, like a snowball rolling down a mountain, will help your money grow exponentially as your earnings generate even more earnings. This is why I started investing at 21.
It’s also the reason why investing early is so important. Think of time as the length of that mountain slope–the longer the slope (time), the bigger the snowball will become (your portfolio) when it reaches the bottom of that mountain (retirement).
Don’t kick yourself if you didn’t start investing early. They say the best time to plant a tree was yesterday, the second best time is today. So go plant that tree!