Is Time on Your Side?
There are many who think you must have large sums of money to make money. The fact is you need time, self discipline and a financial goal plan. The biggest asset millennials have is time. Let’s take a look at how time can be on your side.
Let’s assume that we have four investors, ages 25, 26, 30 and 50 years of age, and each is able to put away $30 a month until the age of 65. We will assume that each investor is able to earn 9% per year until 65 years of age. What is the cost of waiting when comparing the 25 and 26 year old, the 25 and 30 year, or the 25 and 50 year old? Let’s take a look:
We will assume that each investor will earn a nominal rate of return of 9% and will contribute $30.00 per month until the age of 65.
| Age | Years of investment until 65 | Value of investment at age 65 |
|---|---|---|
| 25 | 40 | $141,492 |
| 26 | 39 | $129,012 |
| 30 | 35 | $88,915 |
| 50 | 15 | $11,437 |
The cost of waiting just one year is a staggering $12,480. Waiting five years will cost you $52,577.
You cannot afford to wait!
Call an IHM Financial Registered Representative today to start your financial goal plan. If you are in your fifties and did not save enough, contact us today to put a comprehensive plan into action now.
We can also view the value of time from another perspective. Let’s assume each investor has a desire to become a millionaire. How much must an investor save each month in order to accumulate $1,000,000?
We will assume that each investor will earn a nominal rate of return of 9%. What payment must each investor make monthly in order to accumulate $1,000,000 given their age and time till retirement age of 65?
| Age | Payments until 65 | Monthly Payments until 65 | Investment at age 65 |
|---|---|---|---|
| 25 | 480 | $214.99 | $1,014,032 |
| 26 | 468 | $235.80 | $1,014,032 |
| 30 | 420 | $342.13 | $1,014,032 |
| 40 | 300 | $897.75 | $1,014,032 |
| 50 | 180 | $2,659.80 | $1,014,032 |
It is clear that if you are a millennial, time is on your side. With self discipline and a financial goal plan, you will put yourself on the road to greener pastures. For those who did not save enough, it is of paramount importance that you contact an IHM Registered Representative and put your comprehensive financial plan into action. Get started today!