Teach Your Children Well: Why Starting Early Matters

One of the most valuable financial lessons is that starting to invest early gives money more time
to grow. For many families, that lesson matters for children and grandchildren as much as for
their own planning.

Why Starting Early Matters: The Power of Compounding
Compounding means returns can earn returns over time. For example, a $50,000 investment
earning a hypothetical 7% annually could grow to more than $380,000 over 30 years. While
returns are not guaranteed, this example shows the value of time. The Rule of 72 estimates
doubling time by dividing 72 by the annual return rate. At 7%, that is about 10 years.
 

Early vs. Late Investing

Year          Early Start                    Late Start
                ($50,000 at 7%)            ($50,000 at 7%)
---------------------------------------------------------------------

0               $50,000                                 $0

10             $98,358                              $50,000

20             $193,484                            $98,358

30             $380,613                            $193,484

This chart shows how much time matters. With the same initial investment, the investor who
starts 10 years earlier gives compounding more time to work and ends with a much higher value.
This example is hypothetical and for illustrative purposes only; actual results will vary.

Time and Risk Tolerance
A longer time horizon may help investors recover from short-term declines and support a greater
allocation to growth-oriented investments, depending on goals, timeline, and risk tolerance.

Building Strong Financial Habits
Starting early can also help build strong financial habits. Saving consistently, investing regularly,
and thinking long term can lead to more confident, disciplined decisions over time.
Helping the next generation understand money and investing can have lasting benefits:

Set an example: Share your experience and explain why long-term investing matters.
Start small: Savings or custodial accounts can turn simple lessons into habits.
Teach the basics: Explain saving, interest, and long-term growth in simple terms.
Encourage questions: Ongoing conversations can make financial topics feel more
approachable.

Final Thoughts
Starting early is one of the most valuable financial habits to encourage. Helping children and
grandchildren understand saving and investing can build confidence and support long-term
financial well-being.
If you would like to discuss investing, gifting, or ways to help the next generation build strong
financial habits, we would be happy to help.
 

Investing involves risk, including the potential loss of principal.