Young Investor’s Guide to Building a Financial Future- Stay Invested for the Long Haul

Part 2

As a young investor, you may not have much money to invest. But what you may lack in resources, you more than make up for with time. With decades until retirement, the modest investments you make now can grow substantially over time.   Don't underestimate the power of small contributions made consistently over the years.  They can have an out-sized impact on your retirement for relatively little effort.

This is thanks to the incredible power of compounding returns, or the return you earn on your returns. Indeed, the longer you can keep your money invested, the longer you can take advantage of compound growth to propel exponential growth in your investments. In tax-advantaged retirement accounts, these benefits are magnified as tax-deferred and tax-free growth allows even more money to compound over time.

You may be skeptical about just how important compounding can be. Consider this example: If you start with a humble penny and double its value every day in June, you’ll end up with a cool $5.37 million by the end of the month. If you started this one-month savings journey in July, which has one more day than June, you’d finish with more than $10.7 million. Of course, chances are slim to none that your investments are going to double every day. But the fact remains that compounding is one of the most powerful financial tools at your disposal. And when you pair compounding with time (remember that extra day in July?), the results can be even more impressive.

Start investing early and trust in the power of compounding!

In short:

The longer you stay invested, the more your investments will have a chance to increase exponentially, thanks to compounding returns.

Interested in learning more about how to take the first steps toward meeting your personal financial goals? Reach out to set up a time, and let’s talk.