The Benefit Of Starting Now

Getting started with investing doesn't cost much, but a late start to building wealth can cost you a lot. Interest is your friend. When people say, "Make your money work for you" many times they are talking about letting interest grow on your initial investment. To demonstrate, if you earned 5% interest every year on a starting amount of $100 you would end the year with $105. Not a bad deal. But what if the deal got better with time?

Compound interest takes things to the next level. If you earn 5% every year on your initial amount of $100 after 3 years you would have $115.76. In year 1 the interest was gained on $100. In year 2 the interest was generated based on $105 ($100 + $5 Interest from year 1). In year 3 the interest was generated based on $110.25 ($105 + 5.25 interest from year 2). It may not seem like a huge difference now but let's look at it in some real life situations.

Married at 30

You and your spouse get married at 30. The average size of a wedding gift is $111. The average size of a wedding is 139 people. Assuming that everyone is a couple (I know...just roll with me) that's 70 couples. If half of the couples bring gifts and they're all cash (again...roll with me) that means you'll end the night with $3,885. 

If you and your spouse invested the $3,885 of gifts into the market, added $100 per month and got an annual return of 6% that would mean at 67 when it was time to retire you and your spouse would have $195,436.25.

What if you decided to just spend it? Right after the honeymoon the kids come along and before you know it you're both 50 and closer to retirement. The jobs have been going well so you have more to start out with, let's say $10,000. Even with the kids in college you've got more to put towards the fund every month so you put in $300 per month. With the same annual return of 6% you would have $134,588.08 at 67 when you were ready to retire.

Even after starting out with more than double the beginning balance and tripling the monthly add-on the couple who started at 50 ends up with over $60,000 less than the couple who started with less money and put less in per month. That's the power of time and compound interest.

For The Kids

You're having a baby. In addition to all the bibs, onesies, socks, and interest apparatuses that supposedly make a baby sleep that you receive from the baby shower you decide to start an investment fund for the new addition to your family.

If you were to add $2000 per year (about $167 per month) and earn 6% return on the account every year for 18 years you would have $65,519.98 to give to your son or daughter for any reason you saw fit when they turned 18.

Now let's say you waited until "things settled down." There's nothing wrong with that. By the time you got ready for start investing for your child they were 9. Because things were in a better place with the job and life you were able to double the amount per year from $2000 to $4000 (about $333 per month). If you were to earn 6% return on the account you would have $48,723.18 when your son or daughter turned 18.

Even with doubling the amount of money added per month couldn't make up for the lost time. The child who's parents started when they were born would have almost $17,000 more than the child who's parents started when they were 9. Once again, that the power of time and compound interest!

InfiniGift Makes It Easy

What if you didn't have to add any money at the beginning or during the lifetime of the fund? InfiniGift makes that a reality. All you do is create your registry just as you would for a baby shower, wedding, housewarming, graduation or any other gift giving occasion. Your family and friends will buy you the gift of stock as compared to the gift of a turquoise blender. While nice, the blender won't grow in value.

Another great thing about InfiniGift registries is they open up again on either the anniversary of the event for which they were created or on the birthday of the person who created the registry. That way every year money is being added. 

InfiniGift is the best way to begin building a financial foundation and establishing a financial legacy for future generations! Sign up today for the waiting list and be among the first to use InfiniGift.

Aaron Galloway