Early Investing

A quick story about the value of investing at an early age and the effects of compounding.

This is about two siblings, Jessica and Steve. As they turn 18, Jessica takes a job out of high school and begins investing. From age 18 to 30 -- when she gets married and has her first kid -- Jessica socks away five grand a year. Then she stops. Steve, meanwhile, goes to college and then medical school. He starts saving at 30 -- the same $5,000 per year. Both invest in the stock market, earning a long-term average of 11% a year. But by age 65, the difference in their financial fortunes will shock you: Steve, who contributed for 35 years straight, will have $1.9 million. But Jessica, who invested for only 12 years, actually has $4.9 million ... thanks to her head start!