WMBCTV: Experts Highlight Compounding for Gen Z Investors

Compounding for Gen Z individuals could be the difference between a comfortable retirement and financial struggle. While many young adults may be focused on student loans and starting their careers, financial experts say Gen Z holds a major advantage when it comes to building wealth: time. They say that by starting early with investments, young adults can harness the power of compounding to build significant wealth. Ryan Gaynor, CFP from Leo Wealth breaks down how this works with an example of how a million dollars could grow from a $5,000 investment.

“So right here we have number of periods - 35 years, so starting your career. You have 5,000 dollars to invest right away,” said Ryan Gaynor, Associate Director at Leo Wealth. “The standard rate of return - 8% - which is what the historical market average has been over a long, extended period of time, like this 35 years.”

And with that 35 years of time, Ryan Gaynor says consistent contributions can grow substantially. 

“With periodic deposits - and I use a whole number here - $5,100 - That’s $425 a month,” said Ryan Gaynor, Associate Director at Leo Wealth. “So $425 a month at an 8% rate for 35 years gets you to a million dollars.”

While Ryan Gaynor explains that the path to a million dollars could start with $425 a month, he also says to stay patient. As everyone’s financial circumstances are different, experts recommend starting with whatever works for you, whether that’s a few hundred dollars a month or a few dollars a day. They say the key is to just be consistent with your contributions.