“The earlier you invest, the richer you are”. Pretty simple, right? Well, while there is certainly more to it than that, investing early on in your life can definitely pay dividends (no pun intended) in the long run.
We all know why we invest, the most prevalent of which is that we aim to put our money to work for us to accrue value through interest, dividends, and capital gains. Now it follows that the longer you are in the market, the higher likelihood you have of increasing your portfolio value. However, two other very important factors come into play when looking to invest early, versus when you’re retiring or anywhere in-between. The younger you are (barring certain income levels) you can place funds into investment vehicles known as Roth IRAs. Now here’s why these are so cool: the earlier you put cash to work in a Roth, the larger the likelihood that the capital gain, dividends, and interest increase in value significantly. Now in contrast to a taxable account where you would pay respective tax levels, with a Roth, you pay $0 on the withdraw! Incredible! This is an easy way to make large profits in the account and not pay a large tax for it!
One other idea, beyond tax-exempt growth that truly helps investors that put their hard-earned dollars to work is that they don’t have to worry as much about their funds.During their investment period, they will most likely incur the bull and bear markets, and their investment longevity means that even if they were to hit a major correction, they would still be able to bump back up once the resurges. Those with a shorter time horizon, may be more vulnerable to these market hits that are commonly seen in the unstable market.
For an interactive experience on what investing early in life can do for you… CLICK HERE