Along with covering your needs and
wants, you might want to use some of your
money for investing. Chances are, you may not have a lot of money to put toward
investing right now. But you can start small and watch your money grow.
Investing is the process of earning money with your money. Investing wisely is
the key to a secure future. Through investing, you can grow your money so eventually
you can retire. This means you have enough money saved so that you no longer
have to work. If you invest well, you can even retire early!
As a young person, you’ve got a huge advantage over adults. That advantage
is time. Time is your best friend when you’re saving money. That’s
especially true when you’re investing for the future.
Todd and Sarah each invest $1,000 per year. That’s
only $19.24 per week. Todd waits to start until he’s 31 years old.
Sarah starts when she’s only 24.
Both investors contribute the same amount to their
investments. Both earn the same amount of interest on their money (9 percent).
Todd contributes $1,000 per year for 34 years. He stops investing when
he’s 65. After 34 years, he has put away $34,000. With interest,
he has a total of $196,982 at age 65.
Sarah contributes $1,000 per year for 9 years.
She stops investing when she’s 31. She only puts away $9,000 total.
She leaves the money in the account and lets it earn interest for the next
34 years. By the time Sarah is 65, she has earned $243,863! Sarah made
more money than Todd because her money earned interest longer. That’s
thanks to the power of time.
Even a small amount of money can make a difference if you start early. The longer
you invest, the more your money will grow.