Summary5 min read

Optimal Finance Daily Episode 3481: “To Be Young! The Best Time to Invest”

Original Author: Jesse Cramer, Best Interest Blog
Host: Diania Merriam
Date: March 7, 2026

Brief Overview

This episode centers on the unparalleled value of investing early in life, highlighting how money invested in your 20s can dramatically outweigh contributions made later. Through Jesse Cramer’s post and Diania’s commentary, the episode breaks down the mathematics of compounding returns, illustrates the concept with relatable stories and analogies, and offers reassurance for late starters. The key message: It’s never too early—or too late—to start investing, but the earlier, the better.

Key Discussion Points and Insights

The Challenges and Temptations of Early Adulthood (01:06 - 02:46)

Entering the Workforce: Young people face a flood of new financial opportunities (spending on wants) and obligations (bills, student loans, rent).
Relatable Struggles: Diania, channeling Jesse’s perspective, describes the excitement and overwhelm of receiving real paychecks for the first time and being pulled between saving and spending.
Student Loans, Groceries, Fun: There are endless ways for young adults to spend their newfound income.

Quote:
“A young person's personal finances are stretched thin. And did I mention an emergency fund? Despite all of these expenses, it turns out that your younger years are also the best time to invest in your retirement.” (01:37)

The Power of Compounding and the Case Study of Wallace (02:47 - 06:34)

Compounding Over Time:
- Hypothetical worker Wallace invests in S&P 500 index funds from age 22–62 (a 40-year career).
- By dollar-cost averaging and not trying to time the market, Wallace benefits from an average historical return of 9% per year.
Exponential, Not Linear Growth:
- It’s not 40 × 9% = 360%; it’s about exponential compounding:
  
  “Instead, you should take 9% growth or 1.09 and raise it to the power of 40. That's a 3141% increase. Whoa. Each dollar that Wallace contributes at age 22 will grow to $31 by the time he retires.” (05:19)
- Money invested at 22 grows more than twice as much as money invested at 32, and more than ten times as much as money invested at 52.
The Stark Difference Early Investing Makes:
- Wallace’s first seven years of investing (ages 22–29) contribute half his entire final retirement balance.
- The following 33 years of investing contribute the other half.
- With 3% inflation (real growth ~6%): The first 10 years equal the next 30 in impact.

Quote:
“Wallace's first seven years of investing contribute half of his final account balance. His final 33 years of investing contribute the other half. That's how significant the growth of his early years are.” (06:10)

The Power of Early Action in Dollar Terms (06:35 - 07:19)

Example:
- Wallace invests $10,000/year for 7 years ($70,000 total, ages 22–29), then never invests again.
- Another person invests $10,000/year for 33 years ($330,000, ages 29–62).
- Both end up at age 62 with about $1.9 million.

Quote:
“Wallace invests $70,000 over seven years. The other person invests $330,000 over 33 years. But they reach age 62 with about 1.9 million. That's my point here. Your youth isn't just a good time to invest. It's the best time to invest.” (07:16)

Addressing Regret and Starting Late (07:20 - 08:21)

For Late Starters:
- “You might say I'm 40 and this post has me depressed. I missed out on investing in my 20s and 30s, and now I'm filled with regret.”
- The important message: The past can’t be changed, but investing now still matters.
- For a 40-year-old, the next 6 years are as impactful as the following 16—a similar compounding effect at any age.

Quote:
“The best time to invest was 20 years ago, but the next best time to invest is now.” (08:08)

Diania Merriam’s Commentary: Compound Interest as a “Beast” (10:40 - 12:00)

Compound Interest Visualization:
- Diania shares the lily pad story: a lily pad doubles every day, covers the pond on day 30, and is only half the pond on day 29.
- The hardest part is saving the first $100,000; after that, compounding makes each subsequent $100,000 easier and quicker to achieve.

Quote:
“Compound interest is a beast when it comes to growing your wealth. And the best way to harness that beast is by putting it to work as soon as possible.” (10:42)

Quote:
“Many people will say day 15. But when you understand compound interest, you'll know that the lily pad will cover half the pond on day 29, and then the whole pond on day 30.” (11:13)

Notable Quotes & Memorable Moments

“Each dollar that Wallace contributes at age 22 will grow to $31 by the time he retires.” (05:22, Jesse Cramer)
“Wallace's first seven years of investing contribute half of his final account balance. His final 33 years of investing contribute the other half.” (06:10, Jesse Cramer)
“The best time to invest was 20 years ago, but the next best time to invest is now.” (08:08, Jesse Cramer)
“Compound interest is a beast when it comes to growing your wealth...” (10:42, Diania Merriam)
“The hardest part is saving your first hundred thousand.” (11:34, Diania Merriam)

Important Timestamps

01:06 — Start of main article reading: The struggle and opportunities young adults face.
03:56 — The math of compounding: 1.09^40 vs. 40 x 9%.
06:10 — Early investing vs. late investing: The “Wallace” illustration.
07:16 — $70k invested early equals $330k invested later.
08:08 — The “next best time to invest is now” reassurance.
10:40 — Diania’s compound interest analogy and final takeaways.

Final Takeaway

This episode delivers a powerful and actionable lesson: The earlier you start investing, the greater the rewards due to compounding. But even for those late to the journey, investing now is still hugely impactful. Whether you’re in your 20s, 40s, or beyond, the message is clear—don’t wait to start, because time in the market will always be your greatest ally.

For full show notes, visit the Best Interest Blog or listen to more insights from Diania Merriam on Optimal Finance Daily.

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Transcript6 lines

[00:00]
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[01:06]
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this is optimal Finance Daily to Be the Best Time to Invest By Jesse Kramer of BestInterest Blog People entering the workforce face a mountain of new financial scenarios and face them in rapid succession. While they might choose to repay loans or buy cool gadgets, they also should consider that their younger years are simply the best time to invest a real paycheck. I still remember the realization that real money would now be filling up my savings account on a bi weekly basis. I had the extra cash to buy all those things I'd always wanted. Sweet, but simultaneously real bills started showing up lame student loans, car payments and monthly rent. And then there were the weekly groceries, my gym membership, gas and utilities. I had no shortage of options and requirements to spend this new money. You are or were in a similar boat. I bet a young person's personal finances are stretched thin. And did I mention an emergency fund? Despite all of these expenses, it turns out that your younger years are also the best time to invest in your retirement. I know it's lame what 22 year old wants to plan for being 60, but I hope that the following math did this article just get more lame will convince you? Meet Wallace first, we have to think about how long a typical career might be. I'm going to assume that our average worker, Wallace, enters the workforce at 22 and retires at 62. That's 40 years of solid work. Next, we have to think about Wallace's retirement account and how it grows. Wallace is a simple man. He uses dollar cost averaging to buy S&P 500 index funds. He doesn't need an investment advisor to navigate the market conditions for him and he doesn't try to time the market. Wallace has a long term timeframe. Some years will be great for Wallace. The stock market will boom in a bull market and Wallace's investments will bloom. Other years will be bad. A bear market means sad Wallace. But these short term rises and falls won't affect Wallace too much over time. Historical data tells us that the market averages out in a positive way. The boom and bust volatility averages to a rate of return of 9% per year. For Wallace's investment portfolio, the money Wallace invests on day one will have 40 years to grow at 9% per year. Year 20 money will have 20 years of growth and so on. Well, how much more does the year 1 money grow than the year 2 money than the year 5 money than the year 20 money? Let's phrase these questions a different way. If Wallace doesn't invest in his 20s years one through eight, how much growth did he lose? The answer to these questions involves compound interest. It's the idea that your money grows and. And then the new growth grows, and then the growth's growth grows. Compound interest acts like a tree. Every new branch or growth sprouts off its own new branches. See Wallace's money grow. Wallace's year zero money grows for 40 years at 9% each year. You might be tempted to think 40 times 9% equals 360% increase. But that's not quite right. That's simple interest. Instead, you should take 9% growth or 1.09 and raise it to the power of 40. That's a 3141% increase. Whoa. Each dollar that Wallace contributes at age 22 will grow to $31 by the time he retires. The money Wallace invests at age 22 will grow more than twice as much as the money he invests at 30, 32 and more than 10 times as much as the money he invests at 52. Crazy. Note this math does not take inflation into account. Why Wallace's twenties are so important. Here's another way to approach this. If we add up the growth factors for age 22, 23, 24, etc. And then do the same counting down from 62, 61, 60, etc. We should find a point where we can say the first X years of Wallace's investment life are equally important as the final Y years. This happens for Wallace at age 29, after seven years of investing. Wallace's first seven years of investing contribute half of his final account balance. His final 33 years of investing contribute the other half. That's how significant the growth of his early years are. That's why your younger years are such a vital investment period. Another quick data point. Wallace's first year, which grows by a factor of 31.4, contributes an equivalent amount as his final 15 years, which only grow by factors of 1 to 3ish. Before you cry foul, let's think about inflation quickly. If we assume a 3% inflation rate, then Wallace's real growth is only about 6% per year. In that scenario, Wallace's first 10 years have the same growth potential as his final 30 years. It's not as stunning as 7 versus 33, but it's still wild. Wallace could invest 10 grand a year from age 22 to age 29 and never invest again. And he'd end up with the same amount of money as another person who invests 10,000 a year from age 29 to age 62. Wallace invests $70,000 over seven years. The other person invests $330,000 over 33 years, but they reach age 62 with about 1.9 million. That's my point here. Your youth isn't just a good time to invest. It's the best time to invest. And a comparison of historical market conditions backs me up on that claim. I missed out on the best time to invest. I know it's hard to invest early in life. All we want to do is pay off some debt, drive a decent car, have a roof over our head. And what the heck is wrong with having a little fun? We finally have the spending power we wished we had as kids. But keep in mind how valuable the early years can be to your retirement. You might say I'm 40 and this post has me depressed. I missed out on investing in my 20s and 30s, and now I'm filled with regret.
[07:44]
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Stop.
[07:44]
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Don't worry about it. The past is immutable and there's no time like the present. So you're 40 and have never invested a dime. That's okay. Your next six years, age 40 to 46, have the same importance as the 16 years after that from 46 to 62. The same idea from before applies here. The best time to invest was 20 years ago, but the next best time to invest is now. You just listened to the post titled to be the Best Time to Invest by Jesse Kramer of BestInterest Blog.
[08:22]
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[10:40]
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because it demonstrates the importance of investing now. The reason you need to invest right now is because compound interest is a beast when it comes to growing your wealth. And the best way to harness that beast is is by putting it to work as soon as possible. I know when I was younger I figured I'd start saving for retirement when I was making more money. But I didn't realize that a small amount of money invested very young can be even more powerful than a much larger amount invested later. Here's a fun way to visualize compound interest. Let's say there's a lily pad on a pond that doubles in size every day. By day 30, it'll completely cover the pond. On what day does the lily pad cover half the pond? Many people will say day 15. But when you understand compound interest, you'll know that the lily pad will cover half the pond on day 29, and then the whole pond on day 30. That's why most of us will spend a lot of time saving our first hundred thousand. But it's going to get significantly easier and take less time for each subsequent hundred grand. Compound interest is our friend, so don't delay and start investing today. That'll do it for today. Have a great day and weekend and I'll be back here tomorrow where your optimal life awaits.