Money educator who saved $100,000 by age 25: How to invest to build wealth

"Time is more important than the amount of money when it comes to investing."

Tori Dunlap.
Courtesy Tori Dunlap

Tori Dunlap, founder of Her First 100K, a blog and financial education platform, saved $100,000 by her 25th birthday. Part of the reason she was able to meet her goal is because she invested consistently.

One of the most important things to remember when it comes to investing, she says, is to start as soon as possible. "Every time I post about investing, I get comments saying 'I can't afford $200/$350/$500 a month!' Ok. Then start with $50. The point is that you START," Dunlap tweeted.

Investing is one of the best and most reliable ways to grow your wealth. Even though getting started can seem scary, the longer you wait, the less money you can accumulate. "We have this analysis paralysis when it comes to investing," Dunlap says. "We think we have to know everything out there to get started but that's not true."

'Only a few dollars is better than doing nothing'

It doesn't matter if you can't invest a lot, says Mark La Spisa, a certified financial planner and president of Vermillion Financial Advisors. "Starting as early as possible, even if it is only a few dollars," he says, "is better than doing nothing or waiting until you accumulate a significant amount."

Dunlap agrees that investing a small amount of money "can have a huge impact." "Maybe it's $50 one time," she says. "That's going to be more impactful than if you wait decades to start investing," thanks to the power of compound interest.

The power of compound interest: How it helps an investment strategy

Video by Jason Armesto

'Time is more important than the amount of money'

Compound interest is the interest you earn on your money, plus the interest it's already accrued.

Let's say you deposit $100 in a savings account with a 5% interest rate. After one year, you'll have $105. If that interest compounds, in year two, you'll earn 5% on the $105, not just the initial deposit of $100. This can multiply quickly without you constantly contributing.

"Time is more important than the amount of money when it comes to investing," Dunlap says.

You shouldn't think about investing as a short-term action, she says. Particularly since a lot of that short-term advice is "more gambling than it is investing."

"The words short-term investing are an oxymoron," she says. "The definition of the word 'invest' is to put energy into something for a long period of time. When you are making investing decisions, think about your long-term goals. This isn't five years out, this is decades out."

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