The Foundational Investor

The Power of Starting Early: Investing in Your Future

You’ve probably heard it before: the earlier you start investing, the better. It’s one of the more powerful financial truths out there.

Time can be a big advantage when it comes to building wealth, because your money has more years to grow through the power of compounding.

Whether you’re earning your first paycheck, picking up a summer job, or just now getting around to thinking about your financial future, now is the time to start. You don’t need to be an expert or have a huge income to invest. You just need to take that first step.

And the earlier you start, the more options you’ll have in the future.

Let’s explore a few ways to get started, whether your goal is to save for your first big purchase, build long-term financial freedom, or save for your children's education.

Building Financial Skills That Last

Money can be intimidating, but it doesn’t have to be. Every time you save, invest, or make a financial decision, you’re building skills that will serve you for life.

Here are a few ways to strengthen your financial foundation:

• Track your income and expenses. A simple budget helps you see where your money is going and where it could be invested instead. Looking for how to get started, reach out for our money-mapping spreadsheet, and I can help you take the first step.
• Ask questions—Understand what you own. When you invest, learn about your funds or stocks. What companies are in that mutual fund? How does diversification protect you? Ask your advisor questions.
• Watch compounding in action. Even small balances can grow meaningfully over time. Review your statements and see how reinvested earnings build on themselves.
• Think long-term. It’s tempting to chase quick returns, but better results may come from patience, consistency, and letting time do its work.

Taxable Investment Account: Investing with Flexibility

If you want to save and invest for goals—like a car, travel abroad, or a down payment on your first home—a taxable investment account might be the right fit.

Taxable investment accounts, sometimes called brokerage accounts, offer flexibility. You can invest in stocks, bonds, mutual funds, and ETFs. There are no contribution limits or penalties when withdrawing funds.  Investment earnings, such as dividends and interest, may be subject to capital gains tax when sold and withdrawn.

Roth IRAs: The Ultimate Long Game

It might sound crazy to think about retirement before you’ve even started your full-time career, or when you are in the middle of raising a family, but starting early at any dollar amount with a Roth IRA is a strategic financial move you want to make.

A Roth IRA lets you invest after-tax money today and then withdraw both your contributions and earnings tax-free in retirement. That’s decades of potential investment growth that the government won’t touch.

To open one, you just need earned income—anything from a summer job, freelance gigs, or full-time employment. You can contribute up to your total annual earnings or $7,000 in 2025, whichever is less. Gifts or allowances do not qualify as earned income.

Even if you only contribute a small amount, time does the heavy lifting. For example, investing $1,000 at age 18 and earning an average of 7% annually could grow to over $14,000 by the time you’re 65, and that’s from just one early contribution. Imagine what steady contributions could do over time.

Unlike a traditional IRA, where there are penalties for early withdrawal, some of the benefits to a Roth IRA are the ability to withdraw contributions (not growth) tax and penalty free at any time, and no future RMDs. Required Minimum Distributions (RMDs) are minimum amounts that owners of certain retirement accounts must withdraw annually once they reach a certain age, currently 73 or 75 if born in 1960 or later.

529 Plans: Saving for Education and Beyond

If higher education is part of your journey or something you want for your kids, a 529 plan is an effective way to save for it. These accounts are designed specifically for education expenses and come with some tax benefits. The money you invest grows tax-deferred, and when you use it for qualified education expenses, your withdrawals are completely tax-free.

Funds in a 529 plan can be used not just for college, but also for K–12 tuition (up to $10,000 per year), graduate school, or even to pay off student loans. If there’s money left over, it can be rolled over to another family member’s account or even into a Roth IRA under new rules (subject to limits).

Family and friends can also contribute, making it a great collective way to invest in your children’s future.

What Are You Waiting For?

You can begin with as little as a few dollars, and with today’s investing platforms, getting started is easier than ever. The earlier you start, the easier it becomes. Investing isn’t just about money; it’s about freedom, flexibility, and building the kind of future you want.

You don’t have to be a financial expert to start saving and investing. You just have to start. Whether that’s opening your first custodial account, contributing to a Roth IRA, or learning about 529 plans, each step builds momentum. Start now, stay curious, and let time do the heavy lifting. Start small and build your foundation!

Let’s get back to basics!

Learn more about Kimberly Hamlin

Hello! I’m Kim, an associate wealth advisor at Allodium Investment Consultants, located in Minneapolis, MN. I strive to provide an amazing experience for clients and help them find financial freedom so they can live their lives to the fullest. My passion is to simplify complicated financial concepts through clarifying the fundamentals. In my free time, you will find me spending time with my husband Tyler, and son Luke. We love underwater scuba diving, watching our son play sports, and tending to our flower garden.

The information provided is for educational purposes only and is not intended to be, and should not be construed as, investment, legal or tax advice. Allodium makes no warranties with regard to the information or results obtained by its use and disclaim any liability arising out of your use of or reliance on the information. It should not be construed as an offer, solicitation or recommendation to make an investment. The information is subject to change and, although based upon information that Allodium considers reliable, is not guaranteed as to accuracy or completeness. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment.