Okay, Jim Cramer didn’t give this advice only to me: He gave it to his audience on CNBC, and it’s worth revisiting. He stressed the importance of getting into the market when you’re young, getting your kids into the market when they’re still in their twenties.
His golden rule: If the market performs in the next 40 years in much the same way that is has in the last 40, the $10,000 that you’ve parked in a low-risk index fund that tracks the S&P will be worth more than $400,000 in 2061. That figure assumes a 10 percent gain every year—and every year’s interest compounds.
“Thanks to the magic of compounding, the earlier in your life you start investing in the market, the bigger your long-term gains can be,” Cramer said.
Watch Jim Cramer map it out here.