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Investing Principal #6 – Start Early and Contribute Regularly to Your Investment Portfolio.
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You can open an investment account with as little as $100 today. Making regular contributions may significantly enhance your investment returns. Time is one of the most powerful tools in building wealth – early, consistent contributions can have the same impact as larger, delayed investments.
For example, John opens an investment account at age 18 with a $100 initial deposit. He contributes $100 each month for the next 32 years, until he turns 50. Let’s assume John invests in the S&P 500 Index, which represents large-cap U.S. companies. The annualized total return for the index over the past 10 years was approximately 12.5% (S&P Global). If John were to earn that same return over the 32 years, his portfolio could grow to approximately $510,000 by age 50 (see Table 1 and Chart 2).
Please note: This example uses historical performance and hypothetical assumptions. Actual future returns will vary and may be higher or lower depending on market conditions. The goal is to highlight the power of starting early—even small amounts can compound into substantial wealth over time. In real life, investors should also consider their personal risk and return objectives and maintain a diversified portfolio.
Now, let’s compare John to Bob, who decided to delay investing. Bob waits until age 30 to begin contributing. To reach the same $510,000 target by age 50, Bob must contribute $477 each month – nearly five times more than John (see Table 1 and Chart 2). Clearly, it’s much easier to invest $100 a month starting at age 18 than to try to catch up later with much larger contributions.
By starting early, you allow your money more time to grow and reduce the burden of needing to invest larger amounts later in life. Again, while actual market returns will differ, this example illustrates how early, consistent investing can make a meaningful difference.
(Table 1. How early regular $100 contributions may result in a $510,000 portfolio value)
(Chart 2 How $100 contributions may grow into $510,000 portfolio and the difference of delaying your investment contributions can require 4x as much monthly savings to reach the same goal)
References:
S&P Global. https://www.spglobal.com/spdji/en/indices/equity/sp-500/?utm_source=chatgpt.com#overview
Disclosures:
The analysis is based on historical data and future expectations that may not be correct. This paper was written as an opinion only. The data is not guaranteed to be accurate or complete. Please consult with your financial advisor before making an investment decision. Neither ECNFIN.COM nor its author is responsible for any damages or losses arising from any use of this information. Past performance doesn’t guarantee future results.
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By Ivan Sichkar, CFA, FRM, CFP®
5
33 ratings
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Enter your email address to follow ECNFIN.com and receive notifications of new articles by email for free. Be the first to read and do not miss future timely research publications.
You can open an investment account with as little as $100 today. Making regular contributions may significantly enhance your investment returns. Time is one of the most powerful tools in building wealth – early, consistent contributions can have the same impact as larger, delayed investments.
For example, John opens an investment account at age 18 with a $100 initial deposit. He contributes $100 each month for the next 32 years, until he turns 50. Let’s assume John invests in the S&P 500 Index, which represents large-cap U.S. companies. The annualized total return for the index over the past 10 years was approximately 12.5% (S&P Global). If John were to earn that same return over the 32 years, his portfolio could grow to approximately $510,000 by age 50 (see Table 1 and Chart 2).
Please note: This example uses historical performance and hypothetical assumptions. Actual future returns will vary and may be higher or lower depending on market conditions. The goal is to highlight the power of starting early—even small amounts can compound into substantial wealth over time. In real life, investors should also consider their personal risk and return objectives and maintain a diversified portfolio.
Now, let’s compare John to Bob, who decided to delay investing. Bob waits until age 30 to begin contributing. To reach the same $510,000 target by age 50, Bob must contribute $477 each month – nearly five times more than John (see Table 1 and Chart 2). Clearly, it’s much easier to invest $100 a month starting at age 18 than to try to catch up later with much larger contributions.
By starting early, you allow your money more time to grow and reduce the burden of needing to invest larger amounts later in life. Again, while actual market returns will differ, this example illustrates how early, consistent investing can make a meaningful difference.
(Table 1. How early regular $100 contributions may result in a $510,000 portfolio value)
(Chart 2 How $100 contributions may grow into $510,000 portfolio and the difference of delaying your investment contributions can require 4x as much monthly savings to reach the same goal)
References:
S&P Global. https://www.spglobal.com/spdji/en/indices/equity/sp-500/?utm_source=chatgpt.com#overview
Disclosures:
The analysis is based on historical data and future expectations that may not be correct. This paper was written as an opinion only. The data is not guaranteed to be accurate or complete. Please consult with your financial advisor before making an investment decision. Neither ECNFIN.COM nor its author is responsible for any damages or losses arising from any use of this information. Past performance doesn’t guarantee future results.
Never miss an episode
Subscribe wherever you enjoy podcasts:
Apple
Spotify
Amazon
Our Mailing Address:
ECNFIN
1288 Kapiolani Blvd Apt 4003, Honolulu, HI 96814
Our Phone:
+1 720-593-1135
Our Fax:
+1 720-790-7606