Perspective :

Help Yourself, Invest Early

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Soundtrack for this issue: “A Boy Named Sue” by Johnny Cash

Most of us have heard the song “A Boy Named Sue.” The synopsis is a father names his son Sue knowing he wasn’t going to be able to be there for him as a parent.  His dad thought naming him “Sue” would make him tougher to survive the world. Now, this is an extreme example of a parent preparing their kids for adulthood. Luckily, my story isn’t that my dad named me Sue. Instead, my parents took my life savings when I was 12 and started an investment account for me. They told me I couldn’t touch it until I was 65. This was devastating for a 12-year-old.  The $500 I had saved my entire life was gone forever in my eyes. It wasn’t until I was in college that I was able to see the power in what had taken place.

I want to show an example of the power investing as early as possible. This example is nothing revolutionary and many people use it, but it is a great visual. Let’s assume there are two people who we will name Amy and Johnny and both are 22 years old. Amy starts investing $3,000 right away and she keeps investing $3,000 a year until she is 31 years old and decides to quit adding money to her account. This means she has invested $3,000 a year for 10 years. Johnny, on the other hand, did not start investing $3,000 a year until he was 32 years old, so he started investing when Amy stop investing. Now Johnny invests $3,000 a year from the age of 32 until he is 65 years old (34 years). Now assuming a hypothetical 7% annualized return, before advisory and other custodial fees, below is an illustration of Amy and Johnny’s accounts when they are 65 years old.








If Johnny kept contributing to his account, it would take him till the age of 82 to finally surpass Amy’s account balance. There are three big takeaways from this:

  1. Start as early as possible: There are many factors in when you should start investing like having emergency savings on hand. If you are unsure on how much you should be contributing or if you are even financially set to start investing, please come talk to us.
  2. It is never too late: Don’t let this visual discourage you from investing. If Johnny had never started, he would have $0 instead of $384,776 at the age of 65.
  3. Encourage youth to get started. If you are a parent or grandparent, consider encouraging your family members to open an account. Even a small amount can teach them financial knowledge, give them a head start, and have more of a positive impact than you know, or they will appreciate (at least right now).

There are many things a parent can do to help prepare their kids for the future. It doesn’t have to be naming them Sue. I am forever grateful to my parents for getting me started early, even if 12-year-old me did not agree.  I want to encourage people of all ages to get started as soon as they can no matter where they are in life. It is never too late.

Also, a funny piece to end it. Invest wisely.









Past performance is no guarantee of future returns. Nothing presented herein is or is intended to constitute investment advice or recommendations to buy or sell any types of securities and no investment decision should be made based solely on information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for an investor’s financial situation or risk tolerance. Diversification and asset allocation do not ensure a profit or protect against a loss. All performance results should be considered in light of the market and economic conditions that prevailed at the time those results were generated. Before investing, consider investment objectives, risks, fees and expenses. Exclusive reliance on the information herein is not advised. Information provided herein reflects Frontier’s views as of the date of this newsletter and can change at any time without notice.
Advisory and custodial fees have an impact on performance. Please ask you financial advisor what affect those fees will have on your individual portfolio return. Before investing consider the investment objectives, fees and expenses.

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