Hi Scott, There is no better investing strategy than starting early and investing regularly in a diversified portfolio of index mutual funds. The compounding of reinvested dividends and capital gains is the most powerful contributor to a fat retirement portfolio.

Barbara, I know what you mean about Ohio. I have moved many times to different places, from my home state of Ohio and have found the spending habits of them to be very different.

In regards to your article, would you say that starting early is even more important that what one invests in? For example, is it better to start earlier even if one is picking the wrong stocks?

#1. Investing early pays off big and the sacrifices are more than worth it.

#2. If you could do it, anyone can save and invest some money starting today, no matter how small the sum.

i understand the benefits of compounding but the illustration is strange.

Hi Barbara, i understand the advantage of compounding and i am looking at it as illustration but we got confused because here we are hearing an account and we thought that its illustrating what you gone through

Specifically, start at age 25 and invest $300 per month in a retirement account (Roth IRA or 401(K). Continue for 40 years until age 65. At an average annual return of 7%, your $3600 annual contribution will grow to approximately $770,000.

@ Kyith It’s just to illustrate a point. If you asked someone, “Would you rather have $5 million dollars or a penny that doubles every day for 31 days?”, I’m sure 98% of people would choose the $5 million. Simply because the don’t get the power of compounding interest.

It’s the same reason when I meet with younger clients and encourage them to start saving $50-$100/month and, at first, they don’t see the point. I have to run then numbers to show what they are missing out on if they don’t start now.