Financial advisors have two mantras for people looking to grow their investments, or just about any long-term savings project. The first is to start setting aside money and investing when you are young. The second is it doesn’t necessarily take large contributions to add up to a lot of savings.

At Isakov Planning Group, we know that these two rules combined make it possible for small, steady contributions to compile surprising sums down the road. It is not about how much you invest today, but how consistently you do it over a long period of time, starting as early as possible.

A Concrete Example

Let’s assume that you are 35 years old and you have an annual salary of $60,000 or $70,000. If you contribute say $250 per month in savings to an investment account, you are adding $3,000 per year. With a 7% annual average return (which reflects approximate returns of the stock market over time), in 30 years, you will have contributed $90,000, but the value at that time would be $285,000.

Here’s why starting early in this scenario is so very important. If you start investing at age 25, the value after 40 years is more than double—$600,000.

Let’s throw in one other change: As your salary grows, after 10 years, you decide to increase your monthly contribution from $250 to $400 per month. Now, at age 65, the amount in the retirement account is $790,000.

And these rough estimates do not include any matching contributions, as in a 401(k), which are sometimes offered by employers.

If You Start Now, Slow and Steady Wins the Race

For those who start small, invest consistently and for the long term, time is very much on your side. Of course, any greater steady contributions as your earning power increases will substantially enhance the size of these accounts (remember that these are based on a 7% historical average, and that could change lower or higher, significantly affecting final amounts).

The moral of this story is that time is the most valuable investment asset, not necessarily the size of your contributions. That means getting started as early as possible is the best move a young person can make.

The truth is small, steady contributions to your investment account can be incredibly powerful. Let’s start building your plan. Contact us at Isakov Planning Group to get started.