Differing investing results when done during career or as retiree
On the day that you became employed, you had brains and hands at work ... and no money.
One the day that you retire, you have brains and money at work ... and no hands.
Suppose you have $100.00 and invest it at 10%.
At the end of the year it'll provide you with $10.00 ... and if you're retired and need the money, you'll put the money in your pocket and use it to live on.
At the end of year two, same thing happens again.
After ten years, the total amount that your $100.00 original investment has earned is $100.00 - it has doubled.
However, while you are operating your life in your career, prudently living on your current income, let's say that you invest an equal $100.00 and have it earn 10%, as well.
The difference is that you leave the $10.00 interest/growth earned after the first year with the original amount, to earn a similar 10%, ongoing. After year 2, you do the same, and continue that plan throughout the ten year period.
When you leave the annual growth to grow along with the originally invested amount, it grows to well over the $200.00 referred to earlier, when the growth was being withdrawn as it was earned: it will have grown to $259.37.
If it had earned 5%, the value after 10 years would have been $162.89.
After 20 years at 5%, $265.33 ... at 10%, $672.75.
After 30 years at 5%, $432.19 ... at 10%, $1,744.94.
After 40 years at 5%, $704.00 ... at 10%, $4,525.93.
After 50 years at 5%, $1,146.74 ... at 10%, $11,739.09.
To figure the value of $1.00, invested at 5% for 40 years on your regular calculator, enter "1 x 1.05" ... then press the "=" button 40 times.
So ... starting to invest during one's earning years and leaving the accumulated asset to continue to grow has some real advantages!
But ... don't forget ... you aren't getting to keep all of the apparent growth.
There's an agency that comes to you every year, with a question and a statement ...
... the question is, "How much did you earn this year?"
... and the statement is, "We want part of it!".
Yes ... the Income Tax people are partners in our personal business! They want a chunk of our income, each year.
Also, the original $100.00 would have bought much more in the market at the beginning of the project than would $100.00 at the end of 10 years ... or 20 years ... or 40 years (when we might have retired) ... or 50 years (when we'd been living on retirement income for a while ... but I hope that we have some extra assets available, in case we live for more than 10 years after retirement).
Inflation chews away part of the value of our assets each year.
So it is more advantageous to invest during one's career, when one plans to let the growth that the invested assets produce continue to produce more assets.
There's another advantage ... if you have an emergency, you have some assets on hand that you can draw on in order to deal with the issue without a great deal of fingernail-chewing. I advise making a real effort to replace the funds that were drawn to meet that emergency, later.
There's another advantage, as well.
When you want to buy a high-profile (or new) car, and need to borrow money, if you use the car as collateral to undergird the loan, the interest rate will be fairly high ... if you don't pay, repossessing and reselling your vehicle is a pain in the patoot for the lender.
If you use stock or mutual fund certificates as collateral ... and don't fulfill your obligations ... all they need do to liquidate is call their broker and deliver the stock certificates: miniscule hassle.
Much less potential hassle ... so substantially lower rate of interest charged.
(I also say that most retired people should carry a substantial portion of their assets in equities ... but that's a different story, that I've developed elsewhere in these forums, if you look ... or email me and I'll send the message).
Good wishes for increasingly shrewd management of your income ... and assets.
And not just teaching your kids, but helping them in their self-chosen project of learning the same game (which you, as the excellent salesperson that you are, have convinced them to buy into).