Have you thought about what you might be giving up by waiting to invest for long-term goals such as retirement? One of the greatest financial tools that millennials have is time. Time’s effect on long-term investment performance is much greater than financial savvy or a large income.

So many younger would-be savers and investors put off starting because they don’t think they know enough. The truth is though that doing just about anything is better than doing nothing at all.

A 25-year-old person that puts just $100 per month into a savings account will have $48,000 when they are 65. Not much to retire on, but even that may help finish off a mortgage so you won’t have a monthly house payment.

Small, incremental changes from that compound the benefits. Now say that you invest in a simple index fund and earn an average 7.1% on that money. That $100 each month becomes $269,968 by the time you reach 65. Small change, big results.

Maybe you are thinking, “Saving $100 per month is easy. I should be able to save $200.” Ok. That translates to $539,936.

Simple enough, right? But what do most people in their 20’s decide to do? Wait.

There isn’t anything unnatural about waiting to save. Most people in this life stage want to finish school, get settled in a career, relationship, or location, buy a reliable car, and maybe have kids. These things require money either directly or through saving for contingencies. It is a little more difficult to put money aside when you feel like every dollar is needed now.

Basic living expenses are an obvious necessity and student loan payments can’t be ignored.

But what is the effect of waiting?

If you save $100 per month starting when you are 35, you will have $36,000 instead of $48,000. That’s $12,000 you won’t have to pay off a mortgage or other take care of any big-ticket items before you retire.

If you wait until you are 35 to earn that 7.1% average return from a simple index fund you will have $124,431 instead of $269,968. That is a $144,537 difference.

Waiting to save $200 per month? That will give you $248,863 instead of the $539,936 you would have if you had started at 25. So, waiting those ten years will cost you $291, 072. That is enough to hurt.

Remember, time is worth more than savvy.

So, what if you start saving $200 per month when you are 25 but only earn 5%? You would have $305,204… which is still $56, 341 more than you would have if you waited until you were 35 and earned 7.1%.

Clearly, deciding now to start saving and investing is going to pay off. The longer you have to earn a return on your savings the greater the benefit is.

So, how do implement a simple savings plan? Two of the most common ways for millennials to save money for the future are:

  1. Open a savings account with your bank. These are simple to set up and most banks will allow you to automatically draft a certain amount out of your checking account each month.


  1. Start contributing to a Roth IRA. The Roth IRA provides a good way for you to save money and earn returns without getting a tax bill. Again, these are easy to set up and will allow you to set up automatic monthly contributions.

There’s always something competing for your efforts, attention, and money. You can’t do it all, but starting an investment plan early will pay off.

Do it. Do it badly even. Just do it now.