This isn’t my usual thing, but I was helping some co-workers with financial questions today, so I am sharing this on the chance that it would be useful to others. I promise I’ll get back to poetry and music posts soon.
It pays to save regularly and to start doing it as soon as you can. I remember hearing this as a person in my 20’s and sort of half paying attention to it. But what did catch my attention was a chart that somebody showed me to the effect that if you save $100 a month earning compound interest from age 22-32 and then let it sit there for 30 more years doing nothing, you still will have more at age 62 than if you waited 10 years and saved at the same rate for the next 30.
This is because of the time value of money. The principal accumulated during those first 10 years has 30 more years to grow, and if you start late you don’t catch up. Every period of interest you miss reduces your chance for growth.
I poked around to find something like chart I remembered, but didn’t find it so made one by myself in Excel–I’m sure I made some typos, and there are some rough assumptions about compounding intervals, etc.,– but the underlying concept is sound: even a small monthly nut put away regularly for a long time can pay off handsomely. But it can’t wait. Presumably anybody over 30 has figured this out, but if you are under 30 (I probably have 1 reader in that category), this tip’s for you.
Here’s the chart & table.
Savings $100 a month for 40 years at 10% Per Annum Compound Interest
Ages 22-62
Total you invest: $48,000
Total interest: $589,678
At age 62 you’ll have: $637,678
Savings $100 for first 10 years at 10% Per Annum Compound Interest
Savings from age 22-32 only, then principal earns interest for remaining 30 years
Total you invest: $12,000
Total interest: $397,745
At age 62 you’ll have: $409,745
Waiting until you are 32 to start saving your $100 a month, and then doing so for the next 30 years, same 10% compound interest
Total you invest: $36,000
Total interest: $193,932
At age 62 you’ll have: $229,932
The geometric series showing the detail is pretty too, so if you like that kind of thing, go fire up Excel or Mathematica and make it yourself, just after you’ve set up your regular $100/monthly savings.
A Few Reasonable Words 
If you’re able to find 10% interest somewhere these days, put as much away as possible. At today’s interest, maybe being more speculative, while you’re young, would be worth it.
Maybe, but I don’t see it as an either/or. The rate of return for that first decade certainly matters, but the math works even at a more pessimistic 6% return prediction for the next decade for stocks. (I was thinking of savings as investing in an index mutual fund, btw, not a savings account, so you are also potentially getting some help from dollar cost averaging.) My message was that you are significantly more likely to be ahead if you start saving/investing at age 22 than 32 because of the time power of money. But your point is certainly right–if you are in the position to take more risk, (nice to do in an Roth IRA for instance) you can do that too. This is basically the Bogle gosple, which not everybody buys (literally or conceptually).