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The Importance of Investing Early
The following is a hypothetical situation showing two investors investing
at a 10% interest rate.
- Investor A starts
investing $2,000 per year at age 18 and invests for only eight years
until age 26.
- Investor B begins
investing the at age 27 and invests $2,000 per year until age 65; a
total of 39 years.
| |
Investor
A |
Investor
B |
| Age of
Investor |
IRA Contribution |
Year-end
Value |
IRA Contribution |
Year-end
Value |
| 19 |
$2,000 |
$2,200 |
$0 |
$0 |
| 20 |
$2,000 |
$4,620 |
$0 |
$0 |
| 21 |
$2,000 |
$7,282 |
$0 |
$0 |
| 22 |
$2,000 |
$10,210 |
$0 |
$0 |
| 23 |
$2,000 |
$13,431 |
$0 |
$0 |
| 24 |
$2,000 |
$16,974 |
$0 |
$0 |
| 25 |
$2,000 |
$20,872 |
$0 |
$0 |
| 26 |
$2,000 |
$25,159 |
$0 |
$0 |
| 27 |
$0 |
$27,675 |
$2,000 |
$2,200 |
| 28 |
$0 |
$30,442 |
$2,000 |
$4,620 |
| 29 |
$0 |
$33,442 |
$2,000 |
$7,282 |
| 30 |
$0 |
$36,835 |
$2,000 |
$10,210 |
| 31 |
$0 |
$40,519 |
$2,000 |
$13,431 |
| 32 |
$0 |
$44,571 |
$2,000 |
$16,974 |
| 33 |
$0 |
$49,028 |
$2,000 |
$20,872 |
| 34 |
$0 |
$53,930 |
$2,000 |
$25,159 |
| 35 |
$0 |
$59,323 |
$2,000 |
$29,875 |
| 36 |
$0 |
$65,256 |
$2,000 |
$35,062 |
| 37 |
$0 |
$71,781 |
$2,000 |
$40,769 |
| 38 |
$0 |
$78,960 |
$2,000 |
$47,045 |
| 39 |
$0 |
$86,856 |
$2,000 |
$53,950 |
| 40 |
$0 |
$95,541 |
$2,000 |
$61,545 |
| 41 |
$0 |
$105,095 |
$2,000 |
$69,899 |
| 42 |
$0 |
$115,605 |
$2,000 |
$79,089 |
| 43 |
$0 |
$127,165 |
$2,000 |
$89,198 |
| 44 |
$0 |
$139,882 |
$2,000 |
$100,318 |
| 45 |
$0 |
$153,870 |
$2,000 |
$112,550 |
| 46 |
$0 |
$169,257 |
$2,000 |
$126,005 |
| 47 |
$0 |
$186,183 |
$2,000 |
$140,805 |
| 48 |
$0 |
$204,801 |
$2,000 |
$157,086 |
| 49 |
$0 |
$225,281 |
$2,000 |
$174,995 |
| 50 |
$0 |
$247,809 |
$2,000 |
$194,694 |
| 51 |
$0 |
$272,590 |
$2,000 |
$216,364 |
| 52 |
$0 |
$299,849 |
$2,000 |
$240,200 |
| 53 |
$0 |
$329,834 |
$2,000 |
$266,420 |
| 54 |
$0 |
$362,817 |
$2,000 |
$295,262 |
| 55 |
$0 |
$399,099 |
$2,000 |
$326,988 |
| 56 |
$0 |
$439,009 |
$2,000 |
$361,887 |
| 57 |
$0 |
$482,910 |
$2,000 |
$400,276 |
| 58 |
$0 |
$531,201 |
$2,000 |
$442,503 |
| 59 |
$0 |
$584,321 |
$2,000 |
$488,953 |
| 60 |
$0 |
$642,753 |
$2,000 |
$540,049 |
| 61 |
$0 |
$707,028 |
$2,000 |
$596,254 |
| 62 |
$0 |
$777,731 |
$2,000 |
$658,079 |
| 63 |
$0 |
$855,504 |
$2,000 |
$726,087 |
| 64 |
$0 |
$941,054 |
$2,000 |
$800,896 |
| 65 |
$0 |
$1,035,160 |
$2,000 |
$883,185 |
| Less total invested |
|
($16,000) |
|
($78,000) |
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