Age-old question right? Well here you go, this is what you need to invest in the S&P 500 index (either in a mutual fund or an ETF), and let it sit and marinate over the years:
The earlier you start, the better it is….
Just take a look….
| Age | Start with | Monthly contribution | Total Contributions | Total Growth | Total at 65 |
| 20 | $0 | $190.00 | $102,600.00 | $899,563.00 | $1,002,163.00 |
| 30 | $0 | $450.00 | $189,000.00 | $843,256.00 | $1,032,256.00 |
| 40 | $0 | $1,050.00 | $318,000.00 | $690,087.00 | $1,008,087.00 |
| 50 | $0 | $2,900.00 | $522,000.00 | $481,510.00 | $1,003,510.00 |
At the age of 20, you only need to put in $190 a month.
If you leave it off until the age of 40, you need to make up for all of those lost years of investing by increasing your contributions by 552% to accelerate the growth.
START TODAY. START NOW.
Don’t leave this off until tomorrow, because a year later you will look back with regret and wish you started today.
8% is a conservative but realistic return
If we go back the past 40 years to 1980, and look towards 2020, these are the average returns below:
8% return is conservative because you’re obviously going to reinvest the dividends from the S&P 500 companies right back into buying more index mutual funds, and you also have to adjust for inflation as it eats away at your profits too.
If you just stick that same amount of money into a savings account earning 1.5% interest, you’ll end up with almost $500K – $850K in lost wealth:
| Age | Monthly Contribution | Total Contributions | Invested at 8% | Saved at 1.5% Interest | Lost wealth difference |
| 20 | $190.00 | $102,600.00 | $1,002,163.00 | 146,590.21 | $855,572.79 |
| 30 | $450.00 | $189,000.00 | $1,032,256.00 | 248,676.16 | $783,579.84 |
| 40 | $1,050.00 | $318,000.00 | $1,008,087.00 | 382,383.99 | $625,703.01 |
| 50 | $2,900.00 | $522,000.00 | $1,003,510.00 | 585,711.73 | $417,798.27 |
Is that enough to convince you?
So what should you buy?
Anything that says S&P 500 or “index funds” to start.
Then after you’re comfortable with that, read more, move on to other index mutual funds or index exchange-traded funds, and so on.
Summary
