The Value of Hindsight
We have all had moments where we said to ourselves "I wish I did this" or "I should have done this earlier".
While fear of the unknown is a factor of not starting, procrastination also plays a big part of putting something to the side until a later time. When it comes to saving and investing for your future, time is one of the most important factors.
Unfortunately, we cannot go back in time. It is gone forever. Time can work for you or against you.
Compounding interest is the 8th wonder of the world, as quoted by Albert Einstein (at least the internet seems to think so, but I am not sure we truly know that he actually said it).
Compounding interest is when the interest earned is also earning interest.
Its effect early on is small, but given enough time, the interest earned is what contributes the larger portion of your savings, not the amount of actual dollars you saved. The key here is that it needs time.
The earlier we start saving and investing, the less we need to save. It might sound strange, but see the image below.
Investor 1 started 10 years earlier, only invested for 10 and stopped.
Investor 2 started 10 years later, invested for 30 years, and still ended up with less money, even though he contributed way more than Investor 1.
Start your financial journey as soon as you can. Creating an action plan that you can stick with for the long haul is key and your future self will thank you for it.
