Sometimes I make visualizations and I’m not sure if they will click with people. This one is one of those. BUT I think the concept is important.

In your first year of investing, it’s really easy to get wrapped up in all the minute details like returns, past performance, fees, tax benefits, etc. Those things are important for sure, but early on the value of all those things is DWARFED compared to simply how much money you are putting in.

For example, if you are an AMAZING investor and invest $500/month for a year and get 12% returns, you’ll end up with $6,400. On the flip side if you’re a HORRIBLE investor and pay all sorts of fees and get a measly 8% return and invest the same $500/month, you will end up with $6,260. Doesn’t matter that much.

BUT if you extrapolate those fees for years and decades the results become DRAMATIC. Investing $500/month for 30 years at an 8% return will give you about $700K, while a 12% return will give you over $1.5M.

So what’s the moral? When you’re getting started, don’t let perfect be the enemy of good. Don’t worry about being a perfect investor, just focus on putting more money in. As time goes on you’ll become more comfortable and then be able to start honing in on those finer details that can help you maximize your returns.

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy