Frankly speaking, the biggest advantage of any single investor is time. How big an advantage? Big enough to allow an ordinary saver to retire well with no worries.
That’s not what happens, of course. Most people do it completely backwards, waiting until their 40s to start thinking about retirement. Let’s look at two scenarios that illustrate the very different outcomes of investing early and late.
The first scenario you probably know well enough. Our late saver has worked hard for decades and has some money in the bank, perhaps $50,000 in money market accounts. It’s rainy day money, for sure, within easy reach if need be.
That’s an admirable safety blanket, but it’s not a retirement plan. If our late saver takes that $50,000 into the market, it only has about 15 years to grow.
What happens next?