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As a young investor, I try to take advantage of the time I have before retirement. I work on a solid asset allocation, investing aggressively as I’m young but looking to tame my exposure to risk as I age. Many tend to point to the $1 million dollar mark as the point where they would be comfortable retiring. To reach that, there’s a certain age that you can max out your 401k contributions for one year, max out your IRA that year and just meet the annual market’s return of 10% (historically speaking) and you’ll get there by the time you retire at 65.

What age is that? Twenty six. If you take $20,500 now (if you’re 26 or younger) and let 41 years of compounding do it’s work, you’ll end up with $1 million at retirement time. Of course you have to take into account inflation, but that’s still a huge gain! You’d get your retirement out of the way and you’d be ready to focus on other financial goals like buying a house and discretionary spending. You’d be free to do what you want with your money knowing that in all likelyhood you’d be ready for retirement at the end of your career road.

Of course it’s important to note that most people at the age of twenty six have enough to worry about. Between student loans, rent, insurance and other expenses it’s unlikely they would hit $20,500 in savings in one single year, but the point is made. Time is the close ally of any young investor.