Time is On My Side…and Yours Too (When It Comes to Saving)

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compound interest, early retirement, time value of money, how to save for retirement, millennial investingThere’s a song by the Rolling Stones called “Time is on My Side” from 1964. While it’s not exactly top of the heap on my iPod, it is a refrain that I think applies to and abundance of the investing (or potential investing) population. It should come as no surprise that I want to preach this to the younger readers of this blog (Millennials, Gen-Y or even Gen-X-ers) because time is such a huge advantage they have. Even if you’re a bit older and want to continue to work for 20 or 30 more years, you can still have time working for you.

I believe I’ve mentioned before, but I’ll say it again; time is really the rocket fuel that will propel your savings and investments into the stratosphere. Sure, it’s important to have investments that earn a good return, but the financial markets sometimes go down and your investment will too. Not to worry though because when you have time on your side, you can keep your investments in place and ride out the market swing until you are able to realize some gains again.

In my own portfolio in 2008, I watched our savings and retirement accounts fall by 27%. That’s a huge pill to swallow and one that can get you pretty depressed if you dwell on it. Fortunately I listened to that small voice in my head that said to keep the money in and don’t pull it out. As it turns out, I was able to realize double digit gains for the next 5 years after this blow. So, with steady investing each year, I was able to watch our portfolio really rebounded nicely and to still allow me to reach my goal of early retirement (which some also call financial freedom or financial independence).

And that is only a 5 year example but you can easily figure out that over a span of 10, 20, or 30 years you will be able to ride out the ups and the downs to keep your ship on course. I know for a fact that had I not started investing right as I started working that I would not be in the position I am 20 years later with a large and still growing portfolio that allowed me to realize even more of my dreams by retiring early or put differently; drastically reducing the amount that I have to work and still be able to have the freedom that I desire.

If all goes as planned, I’ll be retired for more years than I worked full-time. But that means that the money has to last for 20, 30, 40 or even 50 years. How is that possible? Compound interest of course, but more importantly it is possible because I have time, and it’s definitely on my side.

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