Investing: The Incredible Benefits of Starting Early

By Steve Diggs, No Debt No Sweat! Financial Seminar Ministry www.stevediggs.com
Each year I present the No Debt No Sweat! Christian Money Seminar in about
forty-five churches and colleges around the country. One of the questions I hear most
frequently is, "Where were you thirty years ago?" The truthful answer is, I was making
the same money mistakes that I teach about today.
Sadly the question is usually being posed by someone who has waited too long to
start their retirement plan.
They say that today's greatest work-saving device is tomorrow. Maybe that's true in some situations-but, at the moment, I can't think of one. Whether it's a mama bird teaching her baby bird about the best time to catch worms, or a financial expert guiding a client, the best advice is the same-start early.
Running with other procrastinators can be fatal. Putting off until tomorrow what should be done today is a recipe for failure. If you want to succeed, it's best to study what successful people do. One of the greatest financial minds in the Bible was King Solomon. As one of the wealthiest people on earth, this guy knew his way around the financial block. Notice what Solomon had to say about procrastinators:
"Go to the ant, O sluggard, observe her ways and be wise...How long will you lie down, O sluggard? When will you arise from your sleep? A little sleep, a little slumber, a little folding of the hands to rest-and your poverty will come like a vagabond. And your need like an armed man." (Proverbs 6:6,9-11, NASV)
The message is clear: The best time to begin an investing program was yesterday. But since yesterday is no longer available, today will have to do. With all the conviction I can muster, I encourage you to begin your investment program as early in life as possible. This may mean putting off some of the extras (expensive vacations, better cars, etc.) for a while longer, but believe me, the benefits of becoming a young investor can be staggering.
Nothing makes the case for this any better than hard, cold numbers. So maybe you'll find the table below interesting. Jack and Judy Jumpstart began their investing careers at age 20 by systematically socking away $2,000 annually the first 8 years of their married lives. (Totaling: $16,000.) Assuming the money compounds at 10% annually until the couple hits retirement at age 66, their nest egg may exceed $1,000,000.
Now, the question you might ask is: With the same assumptions in place, if three other couples wait until ages 30, 40, or 50 to start saving-how much would they have to lay aside each year until age 66 to achieve the $1,000,000+ that Jack and Judy's original $16,000 investment may have grown to?
Well, if they begin at age 30, like Larry and Lisa Loafer, the couple would have to invest $2,800 per year for 37 years, totaling $103,600. If a couple followed in the path of Ollie and Odette Oh-No and waited until age 40 to start saving for their golden years, the burden would have grown exponentially. Starting at 40, they would have to set aside $7,600 annually for the next 27 years (a total investment of $205,200.) And, if a couple put off retirement planning until age 50, as Herb and Helen Hurry-Up did, they would have to sock away $23,000 per year for 17 years (totaling a whooping $391,000) to hopefully get their chins over the $1,000,000 bar!
An Incredible Achievement (Assuming You Could Convince Your Teen To Do This)
Now, let's put some real-life legs to this. What if you could convince your sixteen year old to trim back a little on the car he is dying to buy-in order to potentially become a millionaire? Here's what I mean: Instead of spending the entire $7,000 he has saved for that "super-duper-hippy-dippy-daddy-bopper-car-to-die-for-suppose you could convince him to lower his sights just a little bit-maybe by just a couple of thousand dollars. Then, suppose he invested that $2,000 in a mutual fund in an IRA that returned 12% over the next several decades. What would you guess that that $2,000 investment might have grown to by age 70? Would you believe it might be as much as $1,018,641.00!!! Maybe that world class CD player isn't worth the extra $2,000 after all?
Uhmmm.....starting early. Simple to understand, but tough to do. But is it worth it? You bet!!!
Steve Diggs presents the No Debt No Sweat! Christian Money Management Seminar at churches and other venues nationwide. Visit Steve on the Web at www.stevediggs.com or call 615-834-3063. The author of several books, today Steve serves as a minister for the Antioch Church of Christ in Nashville. For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four children whom they have home schooled. The family lives in Brentwood, Tennessee.
Originally published April 07, 2005.