FINANCIAL MATTER$ – 401(k): When should you start?

by Jac M. Arbour CFP, ChFC
President, J.M. Arbour Wealth Management

Which would you rather have … a million dollars today or the result of one penny doubling every day for the next 30 days? If you chose the penny, good for you! It would be worth about $1.3M on the 28th day and $5,368.709.12 on the 30th day.

In my opinion, there is no factor that has a more profound effect on the value of money than time. Compound interest was once said to be the eighth wonder of the world, and when considering the previous example, you might agree.

As an advisor in the retirement industry, I hear many different reasons about why people choose to participate or not participate in their employer’s 401(k) plan. When speaking with investors, it has always been a goal of mine to effectively explain the power of time and compound interest. Yes, choosing the right stocks or funds is important, but equally important is having time on your side. It doesn’t take a lot of money from one’s paycheck (even $10/week can make a difference) to build something significant for down the road, as long as you start young.

Whether you end up with $100,000 or $5,000,000 at retirement, you’ll be glad you put some money away for yourself and you’ll likely be even happier if you started at a young age.

If you are a parent, grandparent, uncle, aunt, or a friend to a younger person, I hope you share this impactful concept with them and urge them to learn more.

Investment advisory services are offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.


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