Start Investing Young

James K. Glassman:

The average annual return for U.S. large-company stocks (as represented by the Standard & Poor's 500 Index) for the past 80 years has been about 10 percent after transaction expenses but not taxes. Say your goal is to build a nest egg of $1 million by the time you are 55. If you start at age 24 and invest $5,000 a year at an average return of 10 percent annually – through, for example, an index mutual fund or exchange-traded fund (ETF) – then you'll reach your goal. But if wait until you are 34 to start, you'll accumulate only $357,000 by age 55. If you start at age 44, you'll have just $107,000.