Today, Nicole is unpacking the most expensive investment mistake you can make — and it's not what you think!
Full Episode
I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. Today, we're going to talk about one of the most expensive mistakes you can make with your money, and it's one that a lot of people don't even realize they're making. Are you ready for it? It's waiting to invest.
Yeah, you're sitting on the sidelines and that can cost you big time. Today, I'm going to prove it. I get it. Investing can be intimidating. There is so much jargon, so many numbers, and so many opinions. Maybe you're thinking, I'm doing just fine with my salary and I don't need to invest. Thank you very much. Or I need to learn more before I dive in.
And trust me, I've heard all the excuses and I even used a few of them myself back in the day. But here's the truth. When it comes to investing, time is literally money. The biggest factor in growing your wealth? It's not about picking the hottest stock or timing the market just right.
You may have heard me say that the ROI on investments typically doesn't come from timing the market, rather how much time you are in the market. It is as simple as that. The longer you are invested, the more it can grow thanks to the magic of compound interest. I told you I would prove it, and I will. Let's say you invest $5,000 in the stock market.
Historically, the S&P 500 has returned about 10% a year. Now, of course, some years are higher and some years are lower, but 10% is a good average for us to illustrate this point. Here's how much you could have by the time you're 65, depending on when you start. If you start at 20 years old, you'll invest a total of $225,000. By 65 years old, that could grow to around $3.6 million.
If you wait until 30, you'll invest $175K. By the time you're 65, you'll have about $1.4 million. That's a lot, but look at the difference. That's over $2 million for just waiting 10 years. If you start at $40,000, you'll invest $125,000 and you'll end up with about $490,000. And if you wait until you're $50,000, you'll invest $75,000 and you'll end up with only about $160,000.
The pattern is obvious. The earlier you start, the more compound interest has to do its thing. And look, I get it. When you're in the thick of your career, retirement feels so, so far away and you have other priorities. But even a 10-year delay could cost you millions. That's the power of starting early. Okay, but what if you're listening to this and you're not 20 years old?
Maybe you're 30 or 40 or 50 and you're thinking, great, I missed the boat. First of all, it is never too late to start. Every dollar you invest today is better than waiting another year. And even if you start later, you can still build wealth by investing consistently. So how do you get started?
Well, if you're the DIY type, you can open a brokerage account and start investing in index funds or ETFs that track the S&P 500. These are low cost and historically reliable ways to grow your money. That's how I started.
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