Don’t Wait to Start

by Stephanie Jacobs, MBA, AFIM®
Senior Wealth Advisor, Midland Wealth Management

It’s said that fortune favors the bold so don’t wait to start investing.

I’m Stephanie Jacobs, Senior Wealth Advisor with Midland Wealth Management.

One of the best financial decisions you can make is to start investing early because the greatest impact on building your investments is time.

The more time we have ahead of us, the more we feel bold and comfortable in taking risk. The bigger the risk, the greater the reward, but should something go wrong, investing over a longer period allows time to recover and to continue along the path of growth. The closer a person is to retirement the more concerned they are with stability and protecting what they have amassed from the impact of high-risk investment and the inability to recover from a major financial event.

This is why it’s important to create great saving and spending habits early. Youth has the added benefit of starting out unburdened by debt that we tend to accumulate later in life, such as credit card debt. Developing a disciplined savings plan that invests a portion of your earnings, controlling poor financial choices and cutting unnecessary expenses spurred on by impulse buying, can establish a routine that will build your wealth over time. It can also provide reassurance that you won’t run out of money in retirement.

Compound interest plays an integral role in growing your investments. It is the money you earn on your initial investment plus the money you earn on the accrued interest. Or put another way, its interest earned on your interest. By continuously reinvesting your earnings, you are exponentially increasing your return on investments.

For example, a 25-year-old who is investing in a company 401(k) for the first time contributes $1,000 in the first year and then discontinues their contributions. At a 10% growth rate by age 65, that initial $1,000 investment will have grown to over $45,000. Whereas an employee starting at age 40 with only 25 years until they reach 65, will result in just a little over $10,000.

Investing early is also a great way of creating a safety net should you face a financial hardship in the future. Urgent need for money can force you to borrow rather than having a way to address the issue yourself which could upset your future plans. Add poor spending choices and credit card debt, and you may find it difficult to move past such a hardship and rebuild.

Through planning and saving early you can prepare for future financial hurdles and look forward to retirement with confidence and peace of mind.

Midland Wealth Management is a trade name used by Midland States Bank and its subsidiary Midland Trust Company. Investments are not insured by the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank or any federal government agency, and are subject to risks, including the possible loss of principal.