• Products
  • Insights
  • Practice Management
  • Resources
  • About Us

As a young professional, you’re faced with conflicting financial priorities. Retirement is farthest away, so it’s tempting to delay saving for it until you feel more established. However, this goes against a main tenet of investing: Time in the market matters more than how much you invest.

Consider this: Growing your retirement nest egg isn’t unlike growing a veggie garden. You plant small seeds and in a few months have healthy plants and produce. If you plant them late, you can’t just make up that lost time with extra water—they need time to mature.


Time Is (Literally) Money

The power of compounding—a concept Albert Einstein once dubbed “the eighth wonder of the world”1—has a similar effect on your investments. Compound interest can help grow money faster because it’s the interest earned on your initial principal and any previously accumulated gains and interest. That’s why starting early, even with a smaller initial amount, can be far more beneficial than investing more later in life.

For example, as the left side of FIGURE 1 on page 2 shows, a 23-year-old professional (Investor A) who starts by consistently investing $12,000 for 10 consecutive years, then allows the accumulated balance to earn interest for each of the following 22 years without making any additional contributions, could be a millionaire by age 54. This hypothetical example assumes an annual return of 8%. 

By contrast, the right side of FIGURE 1 shows a 33-year-old professional (Investor B) who also wants to become a millionaire by age 54 but must play catch-up by socking away $20,000 a year for 17 years. This investor would grow wealth significantly, too, but would have to invest about 3x the principal of the early starter ($340,000 vs. $120,000). 



Investor A Starts Early and Grows $120,000 into $1 Million by Age 54
But Investor B starts late and must save $340,000 for 17 years to get to a million

For illustrative purposes only. Investor A uses a $12,000 initial investment; Investor B uses a $20,000 initial investment. Both scenarios use a hypothetical 8% return and do not take into account taxes, transaction costs, or market declines, and use a combination of IRA and company-sponsored 401(k) contributions. The illustration doesn’t represent any particular investment, nor does it account for inflation.


The amount you invest can be less important than when you start investing.


It’s important to note that investing early doesn’t guarantee success, and that starting late doesn’t mean you’ve failed. Both investors in these hypothetical scenarios reach the million-dollar mark, they just do so at different times and with different outlays. The main takeaway is that the amount you invest can be less important than when you start investing.


A financial professional can help you get your retirement savings on track whether you're starting early or late.


1 According to Einstein, “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn’t,  pays it.”

Important Risks: Investing involves risk, including the possible loss of principal. 

This information should not be considered investment advice or a recommendation to buy/sell any security. In addition, it does not take into account the specific investment objectives, tax, and financial condition of any specific person. 

This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed. This material and/or its contents are current at the time of writing and are subject to change without notice.



CCWP058 2650191

The material on this site is for informational and educational purposes only. The material should not be considered tax or legal advice and is not to be relied on as a forecast. The material is also not a recommendation or advice regarding any particular security, strategy or product. Hartford Funds does not represent that any products or strategies discussed are appropriate for any particular investor so investors should seek their own professional advice before investing. Hartford Funds does not serve as a fiduciary. Content is current as of the publication date or date indicated, and may be superseded by subsequent market and economic conditions.

Investing involves risk, including the possible loss of principal. Investors should carefully consider a fund's investment objectives, risks, charges and expenses. This and other important information is contained in the mutual fund, or ETF summary prospectus and/or prospectus, which can be obtained from a financial professional and should be read carefully before investing.

Mutual funds are distributed by Hartford Funds Distributors, LLC (HFD), Member FINRA|SIPC. ETFs are distributed by ALPS Distributors, Inc. (ALPS). Advisory services may be provided by Hartford Funds Management Company, LLC (HFMC) or its wholly owned subsidiary, Lattice Strategies LLC (Lattice). Certain funds are sub-advised by Wellington Management Company LLP and/or Schroder Investment Management North America Inc (SIMNA). Schroder Investment Management North America Ltd. (SIMNA Ltd) serves as a secondary sub-adviser to certain funds. HFMC, Lattice, Wellington Management, SIMNA, and SIMNA Ltd. are all SEC registered investment advisers. Hartford Funds refers to HFD, Lattice, and HFMC, which are not affiliated with any sub-adviser or ALPS. The funds and other products referred to on this Site may be offered and sold only to persons in the United States and its territories.

© Copyright 2024 Hartford Funds Management Group, Inc. All Rights Reserved. Not FDIC Insured | No Bank Guarantee | May Lose Value