Commentary
The younger generations should ignore the chart below that is often seen in a variety of forms in the financial media touting “how easy it is to become a millionaire.” There are two primary reasons millennials aren’t saving as they should. The first is the lack of money to save, and the second is that markets do not compound returns.
The following chart depicts four hypothetical millennial investors who invest $10,000 a year at a 6.5 percent annual rate of return over different periods of their lives: Thomas invests for his entire working life, from 25 to 65.
Mackenzie starts 10 years later, investing from 35 to 65.
Colton puts money away for only 10 years at the start of his career, from 25 to 35.
Taylor saves from 25 to 65, like Thomas, but instead of being moderately aggressive with her investments, she simply holds cash at a 2.25 percent annual return. (RealInvestmentAdvice.com)
At first glance, it is apparent that starting a consistent saving and investing program early in life leads to the best financial outcomes. Of course, such is entirely logical….
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