New to the Workforce? Make Your First Paycheck Work for You

It's been a hard year for everyone, but the recently graduated class of 2020 is facing a unique set of challenges. Due to rampant unemployment and a shaky recovery, those with little to no work experience have less control of their finances than ever before. If you are employed during such an unstable time, investing is a critical tool to guide your financial future. Putting your money to work within the stock market regularly (starting with your first paycheck) allows you to take full advantage of compound interest and accumulate wealth. After all, your money should work for you, and not the other way around.

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The S&P 500 has averaged a return of around 10% per year over the long term. That's great and all, but 10% doesn't sound like much when you're just starting out -- and it's not, at first. Unfortunately, 10% of a whole $10,000 is only $1,000 per year. Compound interest is incredibly powerful; however, it can be equally boring at the beginning. If you had invested that $10,000 just ten years ago into the S&P 500, you would be sitting on over $37,000. The only thing you'd have to do is reinvest the dividends. However, chances are your first paycheck will not allow you to drop $10,000 into a portfolio to leave untouched. That's OK! In fact, even if you start investing just $84 per bi-weekly paycheck at a 10% annual return through a 40 year career, you'd be a millionaire. Those contributions over time add up to around $87,000. Ultimately, $913,000 of your million dollar portfolio is generated by investing early and letting compound interest do its thing.

Source Fool.com