Start Investing Now

Are you in your 20’s or 30’s and still haven’t started saving and investing? Don’t miss your window of opportunity. The sooner a person starts investing, the longer compounding can work in their favor, and compounding is the magic to a comfortable financial life.

Below is a simple chart of one’s investment returns if he invested in the S&P 500 Index for the last 40 years. Over four decades, you would have made a return of 10+% 25 times, with more than half of those north of 20% while you would have lost significant money only 7 times. If the future follows this basic ratio, the odds are clearly on your side.

Common alternatives have not performed as well. Housing has not kept up this pace (especially when you consider property tax), nor have bonds or gold which over the longer term have returned around 5%. Recent darling Bitcoin has been on a tear but it doesn’t have proven history and arguing the logic behind its value remains a mystery: relative scarcity and speculator demand does not equal long-term intrinsic value.

Barring some unforeseen black swan like a major war, investing in stock equities remains the best bet winner. If a person has a longer term horizon, I would advise a 50/50 split between the VOO (S&P 500) and the QQQ (Nasdaq 100). It increases you mix of big tech, but big tech seems the likely winner as the world hurtles toward AI Everywhere.

I.M. Optimisman