If you want to retire a millionaire by 65, there’s one move you need to make immediately, according to finance expert Suze Orman. Orman says you must begin investing right now. 

Here’s why doing this today is so important, rather than putting it off for tomorrow.  

Compounding is the best and fastest way to build wealth

Orman had a very simple explanation for why starting to invest immediately is the key to being ready for retirement at 65. It all comes down to one thing: Compounding.  As Orman said, compounding works like this:

• You invest money
• Your money makes money
• The money that your money made makes more money

This cycle can rinse and repeat over and over again, with your account balance growing each time and your nest egg starting to make you even more money.

The more times this happens, the richer you get — and the earlier you begin investing, the more opportunity there is for your money to compound. 

How big of an impact can compounding make?

Compounding can do a lot more for you than you might think. To understand just how much of an impact it can have, let’s look at how much you’d have to invest to end up with $1 million by 65, depending on how old you are when you start. This assumes you earn 10% average annual returns. 

• If you start investing at 25, you must invest $188.28 monthly
• If you start investing at 35, you’ll need $506.60 monthly
• If you start investing at 45, you’ll need $1,454.96 monthly
• If you start investing at 55, you’ll need $5,228.77 monthly. 

If you do the math, investing $188.28 every month for 40 years, starting at 25, would mean you put $90,374.40 into your investment account to end up with $1 million. But if you started at 55, you would need to invest a whopping $627,452 of your money in order to end up at the same place.

The time delay, and the fact your money had less chance to compound, costs you an extra $537,078 over your lifetime. Put another way, compounding allows your money to earn you over half-a-million dollars with no effort on your part if you start investing early. 

Starting to invest today can pay off big time

The reality is that most people can’t invest $5,228.77 or even $1,454.96 every month — but they can invest $188.28. Even young people just getting started could come up with that money by working a side hustle a few hours per month if they had to.  

Since compounding allows you to turn relatively small sums into big bucks by putting your money to work, it makes it possible for the Average Joe without a six-figure income to become a millionaire. That’s only if you give it time to work though.

So, follow Orman’s advice and invest right now. You can work with a financial advisor to help you find room in your budget and figure out what to invest in if you aren’t sure how to begin.  

Of course, you may not be 25 anymore — but you also aren’t getting any younger. Every day you wait is one less day you benefit from the magic of compounding and you’ll never get the chance to start earlier than today. Open your investment account, invest as much as you can, and begin watching your wealth grow so you can get the security you deserve. When you end up a millionaire, you’ll be glad you took Orman’s advice and jumped in.

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