You often hear the phrase: “Time is money.”
It usually refers to a business owner who knows that there are only so many hours in a day and that wasted time leads to a decrease in productivity and profits.
Farmers use it too, but in other words; They call it “making hay while the sun is shining”.
When it comes to money and investments that work for you, this commonly used term is literal. Once you understand compound interest and how powerful it can be, “time is money” takes on a new meaning.
It’s amazing how much money can grow over time when invested and left alone. This is where compound interest comes into play, and those who understand and apply this principle early on will almost always be rewarded in the long run.
In his book, The Psychology of Money, Morgan Housel mentions the story of the famous investor Warren Buffett (pages 49-52). Buffett is widely recognized as one of the largest investors in the world and is often recognized for his investment expertise.
At the time the book was published in 2020, Buffet had a net worth of $ 84.5 billion. As impressive as that is, Housel reminds readers that $ 81.5 billion came in after Buffet qualified for Social Security in his mid-sixties.
According to Housel, Buffett has an average return of 22%.
However, the return is not the decisive factor for Buffet’s investment success. Buffet’s total wealth has more to do with the time its money has been invested than it does with returns. He has been investing money since he was ten.
If you’ve been in the market for a few years, you’ve likely seen the effect of compound interest on the growth of your money. The great reward for disciplined investing comes in later years, after all the hard work along the way is done.
If you are just starting out or are struggling with a variety of life circumstances – like bankruptcy, divorce, changing jobs, pulling down a huge mountain of student loan debt, or starting a doctor’s office – you may need a fresh start to plan for the future. Do not give up. Start where you are and remember that it takes time to see big changes, but they will come in time.
If you have a career that requires a lot of training and time to become a doctor, for example, time is an even bigger factor because your working years are limited. For example, doctors work longer on average than other people, often also because they started their careers later. As a rule, four years of medical studies and three years or more of residency mean that many doctors don’t earn a sizeable income until they are 30 or older, far behind their colleagues who have done most other professions.
There are a few important things you can do to get compound interest regardless of your age or situation.
- Be consistent. Make sure you put something away from every paycheck.
- To have a plan. Make sure you know where you are and where you are going. As you create your plan, make sure you are working with someone who can help you with it and understands your overall goals.
- Be patient. As you keep investing, you will find that your money will compound over time.
When it comes to investing your money, time is an important factor. However, there are a number of significant advantages to using a financial advisor. We are committed to demonstrating and delivering real, measurable value every year in order to continue to earn our customers’ trust and business. We’ll do it. We’d love to teach you how. TrueNorth wealth offers a free consultation to convey this value and how we can help you prepare to face your retirement prudently.
Contact the paid financial planners at to schedule a free investment and retirement plan tailored to your personal financial goals TrueNorth wealth, one of the fee-paying wealth management firms in Salt Lake City. 801-316-8175.