Start Early, Start Early, Start Early

By Larry Kahaner


It’s not timing the market; it’s time in the market.

I don’t know who said it, but they’re right. No one can predict the future and tell with any certainty that we’re at the top of a market – so sell – or that we’re at the bottom of the market – so buy.

What we do know for sure is that the market will go up and down and in the long run; the overall market will rise by about 9 percent annually. It may rise like crazy or drop like a stone during any particular year or years, but over a long term period, around 10 years, it usually will rise. The longer we keep money in the market, the better we do because the ups and downs are smoothed out. Not only that, but any dividends you receive from your stocks (the S&P total market index gives returns of about 2 percent a year.) that are reinvested only make your investment rise further.

Armed with that knowledge, it pays to get into the market as early as you can.

A recent story from Vanguard bears this out:

“According to our projections, a 20-year-old investor who begins saving $200 per month in a Roth IRA, invested in a portfolio of 80% stocks and 20% bonds, would have about a 55% chance to accumulate over $1 million by age 65. On the other hand, if a 30-year-old investor follows the same program, the likelihood of being a millionaire drops to 14%.” 

In other words, start when you’re young.  Here’s one of my favorite graphics.






 I show it in my presentations and it explains what I’m talking about. The first person starts investing at age 22 and stops at 30. The second person starts at 31 and stops at 65. At that age, 65, look at the difference between the two people. And note that the first person only puts money away for 8 years. The second for 34 years. This illustrates the power of time and compounding. Also, note that I’m using a conservative 6 percent return. 

The takeaway: get started now.



 A former Washington correspondent for Business Week magazine, Larry Kahaner is the author of 15 books, including the best-selling Competitive Intelligence, a Book-of-the-Month selection that has been translated into six languages. He has also written Values Prosperity and the Talmud; Business Lessons from the Ancient RabbisThe Quotations of Chairman Greenspan and AK-47; the Weapon that Changed the Face of War. Full bio.

His in-person, interactive, multimedia presentation titled Fiscal Fitness Boot Camp  is available to colleges, universities and companies. You can email him directly at Larry Kahaner.

He is represented by Wolfman Productions, Inc.

3 thoughts on “Start Early, Start Early, Start Early

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