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Because 15 years of compound interest in the stock market more than covers the difference in income between a 25 year old and a 40 year old. The 25 year old has
by twblalock 7y ago
Because 15 years of compound interest in the stock market more than covers the difference in income between a 25 year old and a 40 year old. The 25 year old has enough time to take risks with money, while the 40 year old needs to be thinking more about preservation of capital.
- AnimalMuppet 7y agoI don't think so. The 25-year-old needs the money starting in 20 years; so does the 40-year-old. The 25-year-old needs the money to last 45 years after retirement; the 40-year-old needs it to last 30 years. Those aren't significantly different time horizons. The 40-year-old can therefore invest with a very similar risk profile, and get very similar returns.