Why should I start building a passive income early in life? I want to enjoy doing fun activities now, and save money later! While that does make sense, have you ever thought about the fact that you can make your wealth grow exponentially? Look at these examples:
“I am 25 years old right now and I will invest $1000 once.”
Safe investing: $5.500 once you’re 60
Risk investing: $28.000 once you’re 60
“I am 25 years old right now and I will start investing $100 each month.”
Safe investing: $111.000 once you’re 60
Risk investing: $342.500 once you’re 60
But wait, I didn’t start that early… is there anything in it for me?
“I am 40 years old right now and I will invest $1000 once.”
Safe investing: $2.500 once you’re 60
Risk investing: $6.500 once you’re 60
“I am 40 years old right now and I will start investing $100 each month.”
Safe investing: $40.500 once you’re 60
Risk investing: $72.500 once you’re 60
Start right now!
As you can see in the examples above; the earlier you start, the larger your gains. Let’s stress the “should I really start right now” just a little more by looking at this comparison:
“I am 24 years old and I will start investing $100 each month.”
Expected wealth at 60: $378.000 once you’re 60
“I am 25 years old and I will start investing $100 each month.”
Expected wealth at 60: $342.500 once you’re 60
Waiting just one year when you’re 24 years old while investing $100 each month (which saves you $1.200 at the time) will make a difference of over $35.000 once you’re 60!
Imagine what you can do with $1.200;
- Buy a second hand car;
- Go on a cruise;
- Buy a high-end TV.
Now imagine what you can do with $35.000;
- Buy a new car;
- One year of life expenses.
No time to wait, you can of course start investing in peer to peer loans or one of many other possibilities. Share yours in the comments!
