Benefits of Starting Early

Benefits of Starting Early

The main benefit of starting early is to take advantage of the power of compounding. Compounding interest allows you to earn interest on both the principal you invest and the interest you earn – potentially enabling you to turn a small sum into a substantial one over time.

When saving for retirement, or another future goal, consider using dollar-cost averaging as a strategy – the process of making regular investments on an ongoing basis, regardless of price; for example, buy 100 shares of an investment each month, quarter or year. You are aiming to buy more shares of a security when its share price is low, and fewer shares when its price is high. Over time, it’s likely the average cost per share will be lower than the average market price. For many, this is the most realistic way to save toward retirement because these periodic investments come from paycheck as opposed to having a lump-sum of money to invest all at once.

Dollar-cost averaging cannot guarantee a profit or protect against a loss, and you should consider your financial ability to continue purchases through periods of low price levels. The example provided is hypothetical and given for illustrative purposes only. It does not represent an actual investment.

benefits of starting early

It’s important to understand how building up your assets now will help you cover your expenses and achieve your goals in retirement.

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