Another investor, Dave, invests $2,000 a year on the same day each year, starting at age 41, for only 10 years.
Let's look at an example. Say Alma invests $10,000 when she's 31 and lets the money grow for 20 years. Another investor, Dave, invests $2,000 a year on the same day each year, starting at age 41, for only 10 years. By the time they both reach age 50, Alma has nearly 15% more than Dave even though she invested half as much. Alma has an ending balance of $32,071 compared to Dave's balance of $27,943.