Summary: They say there is no such thing as a free lunch. Find out how to make a million dollars for FREE by doing absolutely nothing.
Why should you start investing early? The power of compound interest can make you rich just through simple saving. From 1927 to 2008, the S&P 500 (an index of the largest stocks) has grown roughly 10% per year, so I modeled a 10% return below. I ran through 4 scenarios. In the first, a person contribute $4,000 a year every year to their retirement account for 30 years. In the second, a person is a better saver and contributes $10,000 a year every to their retirement account for 30 years. In the second set, I modeled the same thing except the person starts 3 years earlier right after they graduate instead of waiting a few years. Where else can you turn $120,000 into over $2 million? Starting 3 years earlier, made the person an additional $700,000 in the example of the $4,000 contributions and roughly $2 million more in the example of $10,000 contributions. Think about that, you can get hundreds of thousands to millions of dollars for FREE just by starting early!
| Age | $4,000/year | $10,000/year | Age | $4,000/year | $10,000/year | |
| 25 | $4,400.00 | $11,000.00 | 22 | $4,400.00 | $11,000.00 | |
| 26 | $9,240.00 | $23,100.00 | 23 | $9,240.00 | $23,100.00 | |
| 27 | $14,564.00 | $36,410.00 | 24 | $14,564.00 | $36,410.00 | |
| 28 | $20,420.40 | $51,051.00 | 25 | $20,420.40 | $51,051.00 | |
| 29 | $26,862.44 | $67,156.10 | 26 | $26,862.44 | $67,156.10 | |
| 30 | $33,948.68 | $84,871.71 | 27 | $33,948.68 | $84,871.71 | |
| 31 | $41,743.55 | $104,358.88 | 28 | $41,743.55 | $104,358.88 | |
| 32 | $50,317.91 | $125,794.77 | 29 | $50,317.91 | $125,794.77 | |
| 33 | $59,749.70 | $149,374.25 | 30 | $59,749.70 | $149,374.25 | |
| 34 | $70,124.67 | $175,311.67 | 31 | $70,124.67 | $175,311.67 | |
| 35 | $81,537.14 | $203,842.84 | 32 | $81,537.14 | $203,842.84 | |
| 36 | $94,090.85 | $235,227.12 | 33 | $94,090.85 | $235,227.12 | |
| 37 | $107,899.93 | $269,749.83 | 34 | $107,899.93 | $269,749.83 | |
| 38 | $123,089.93 | $307,724.82 | 35 | $123,089.93 | $307,724.82 | |
| 39 | $139,798.92 | $349,497.30 | 36 | $139,798.92 | $349,497.30 | |
| 40 | $158,178.81 | $395,447.03 | 37 | $158,178.81 | $395,447.03 | |
| 41 | $178,396.69 | $445,991.73 | 38 | $178,396.69 | $445,991.73 | |
| 42 | $200,636.36 | $501,590.90 | 39 | $200,636.36 | $501,590.90 | |
| 43 | $225,100.00 | $562,749.99 | 40 | $225,100.00 | $562,749.99 | |
| 44 | $252,010.00 | $630,024.99 | 41 | $252,010.00 | $630,024.99 | |
| 45 | $281,611.00 | $704,027.49 | 42 | $281,611.00 | $704,027.49 | |
| 46 | $314,172.10 | $785,430.24 | 43 | $314,172.10 | $785,430.24 | |
| 47 | $349,989.31 | $874,973.27 | 44 | $349,989.31 | $874,973.27 | |
| 48 | $389,388.24 | $973,470.59 | 45 | $389,388.24 | $973,470.59 | |
| 49 | $432,727.06 | $1,081,817.65 | 46 | $432,727.06 | $1,081,817.65 | |
| 50 | $480,399.77 | $1,200,999.42 | 47 | $480,399.77 | $1,200,999.42 | |
| 51 | $532,839.74 | $1,332,099.36 | 48 | $532,839.74 | $1,332,099.36 | |
| 52 | $590,523.72 | $1,476,309.30 | 49 | $590,523.72 | $1,476,309.30 | |
| 53 | $653,976.09 | $1,634,940.23 | 50 | $653,976.09 | $1,634,940.23 | |
| 54 | $723,773.70 | $1,809,434.25 | 51 | $723,773.70 | $1,809,434.25 | |
| 55 | $800,551.07 | $2,001,377.67 | 52 | $800,551.07 | $2,001,377.67 | |
| 56 | $885,006.18 | $2,212,515.44 | 53 | $885,006.18 | $2,212,515.44 | |
| 57 | $977,906.79 | $2,444,766.99 | 54 | $977,906.79 | $2,444,766.99 | |
| 58 | $1,080,097.47 | $2,700,243.68 | 55 | $1,080,097.47 | $2,700,243.68 | |
| 59 | $1,192,507.22 | $2,981,268.05 | 56 | $1,192,507.22 | $2,981,268.05 | |
| 60 | $1,316,157.94 | $3,290,394.86 | 57 | $1,316,157.94 | $3,290,394.86 | |
| 61 | $1,452,173.74 | $3,630,434.34 | 58 | $1,452,173.74 | $3,630,434.34 | |
| 62 | $1,601,791.11 | $4,004,477.78 | 59 | $1,601,791.11 | $4,004,477.78 | |
| 63 | $1,766,370.22 | $4,415,925.56 | 60 | $1,766,370.22 | $4,415,925.56 | |
| 64 | $1,947,407.24 | $4,868,518.11 | 61 | $1,947,407.24 | $4,868,518.11 | |
| 65 | $2,146,547.97 | $5,366,369.92 | 62 | $2,146,547.97 | $5,366,369.92 | |
| 63 | $2,365,602.77 | $5,914,006.92 | ||||
| 64 | $2,606,563.04 | $6,516,407.61 | ||||
| 65 | $2,871,619.35 | $7,179,048.37 |
