I have already missed out on $900K for being financially illiterate. If you’re young, don’t make my mistake. Start early.

I am posting two screenshots. In both cases, the years, my earnings, and the VTSAX interest rates are real. For my contributions, both cases assume a saving rate of 25%. Contributions and compounding is on a monthly basis.

START EARLY

START LATE

Prior to 2013, I did not pay attention to my retirement funds, did not know where/how to invest, and generally was not disciplined with saving. I blew a lot of money on travel, unnecessary purchases, and generally living unconcerned about financial planning. I managed to scrounge up enough money for a mortgage down payment, purchased a house in 2007, have since moved to a new house, got married etc. (so not all bad), but still money was in cash and no investments to speak of. Luckily, for my 401, my employer made contributions without me matching anything, so I am at least so grateful for that.

Since 2013, I have been trying to save 25% of my earnings. And that year, I started investing in VTSAX (only). I don’t always get to 25%, but it has been very close. I believe I could have pulled off the same saving rate all the years before that.

The first image, titled START EARLY, shows what would have happened if I was able to save 25% of my earnings consistently starting in 2001.

The second image, titled START LATE, shows what has happened. In this scenario, I assume I was starting from 0 in 2013. This is a pretty accurate number. As whatever I had was all in cash, or had already gone into my down payment.

The difference in today’s balance (bottom right figure in each case) is shocking to say the least. I see that I have basically given up $900K already. I can’t believe it!

I know we are all aware of the value of compounding, but if you’re like me, you may be playing with online interest calculators using hypothetical numbers, rather than running the real numbers with your actual earnings and interest rates.

I want to cry! If you are young, I hope you find this useful. I had nobody around me who talked about retirement plans, investing, and saving in a disciplined way. The only reason I started in 2013 was that it was the first year I was able to sit down for a few days over the summer to go through my retirement plan that was setup by my company. I was shocked to learn that I could have contributed to my plan myself! I started reading heavily about investing, retirement plans, contributions, 401K limits, IRAs etc. And whatever I have learned, it’s been through Reddit. So trying to pay it forward. I am now 100% VTSAX and target retirement funds.