Rick: Welcome to Market Thoughts. I am Rick Zich, an advisor here at Southwest Investment Advisors. Joining me is Bart Schannep, cofounder and president of Southwest Investments. How are you doing Bart?
Bart: I’m doing terrific.
Rick: Time is money.
Bart: Yes it is.
Rick: Prove it.
Bart: I can easily prove it.
Rick: Alright, very good.
Bart: Alright. When we’re talking with younger clients, the main thing we keep beating into them is time is money. They have an asset that I don’t have. They have an asset that no one can buy more of, and that is time. When we talk about how do you end up being financially independent, how do you end up being financially comfortable, it all comes down to investing early and often. Early is all about time. It allows money to grow.
I’ve got a really good example to show. Here you can see if I started for 10 years and saved $1,200 a year for 10 years straight, but my friend Rick here didn’t, he procrastinated, he would have to invest not 1,200 a year but $1,550 a year for the next 30 years if I did nothing more for us to end up pretty much even., for us to end up at the end of 40 years, assuming that the money was able to grow at a decent rate.
Here we only used eight percent. We did not calculate in taxes nor the cost of transaction, but simply a simple eight percent compounding. You can see we both end up at around 189,000.
Rick: Time is money. Actually, I had to spend a lot more money, $46,000 compared to 12. I invested almost four times the amount of money just because I started 10 years later. That’s all.
Bart: The earliest people can start saving, the younger they are, the more time it has for that money to compound.
Rick: Thank you very much, Bart, for that insight. That was really, really helpful. Thank you for joining us. [Music plays] We hope that you come and look at a few more of our videos to give you just great information to help you on your investment path.