I’ve noticed a theme developing when I read about finances. First of all, my exposure to my first three “experts” have been eye-opening in many different ways. They don’t always agree on everything…these “experts”…so you have to be prepared to pick a tactic you trust if you are trying to get serious with your coin.
Although there are differences, there’s a theme developing universally. Investing as early as possible and as much as possible using the magic of compound interest is one of the best ways to accelerate you path to financial freedom. There are so many kids out there right now with $2000 in cash, savings bonds, $2 bills, piggy banks full of coins…etc. That money will get blown 99.9% of the time, but if you could convince a 16-year-old paperboy or a 14-year-old babysitter that the pathway to being a millionaire was already in their hands…wow…the power of starting early is amazing.
I propose a $5.00 challenge to anyone willing to try, but especially the younger folks for whom this would work the best.
It’s this simple. Save $5.00 per week, and do it for 52 straight weeks. At the end, you should have $260.00. Invest it in an index fund…and do it again….and again….and again. If you saved the $260.00 per year by finding $5.00 a week – the returns are significant. Check out the return rate.
- 10 years – $3,843.74
- 20 years – $11,404.95
- 30 years – $26,278.99
- 40 years – $55,538.49
So, if you started doing this when you were 16, you could have over $55k before you turn 60.
If $5.00 seems like child’s play, and you’re way out of that league, I’ll run one scenario for you…just for fun. Think you can find $5.00 every day to save? It’s probably easier than it sounds…we sometimes put that much money in vending machines, eating out, impulse buys at gas stations, the list goes on. Try to find $5.00 per day; make it easier by forcing yourself to save $35 per week (set up an auto transfer to a savings account, or an etrade account). Using the numbers above, try to guess what’s going to happen if we figure out how to do this for the same time periods listed above.
Think you’re close? Think you’ve got it? No cheating!
Alright, here we go.
- 10 years – $26.980.07
- 20 years – $80,053.95
- 30 years – $184,458.30
- 40 years – $389,837.46
Makes you wish you started when you were 16, am I right? It’s not too late to get started. Find that $5.00 challenge you are willing to tackle, and go invest here now!
