Starting Now is Good, But Starting Young is Great: How Time Affects Investing

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Time—the constant, universal element that holds more power than any other factor in investing. The most underrated, under-discussed asset ever is our time. As investors, we often declare the mantra, “Cash is king.” If cash is of royalty, I would argue time is of godliness.

We all have a finite amount of time to be alive. Unfortunately, many of us trade so much of that time for cash. We know this isn’t right, we know it doesn’t feel good, and yet so many continue to trade time for money. There is a better way—a way to combine the power of time and money to take control of your most precious asset.

In this article, I will outline the power time has on our investments, specifically real estate, and why people of all ages should be using whatever amount of time they have. I’ll also show the younger generation that because of the time they have, they are the wealthiest generation—they just don’t know it. I believe wealth is measured in time, not money. However, our time can be preserved with money, and our money can grow easier with more time. Let me explain.


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Exponential Growth: The Story of Bailey

The reason time is the most valuable asset is due to the extraordinary power of exponential growth. Some may refer to it as compounding interest. No matter what you call it, the largest factor in an exponential equation is time. Albert Einstein said, “Compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn’t pays it.” And Albert Bartlett emphasizes the importance of exponential growth with his quote, “The greatest shortcoming of the human race is our inability to understand the exponential function.”

The power of exponential growth can work for you rather than you trading hour after hour to earn money to live the lifestyle you want. As exponential growth continues to work, the growth becomes more rapid and your path to financial freedom accelerates. This is why starting on this path now rather than later is so important and why starting young can be so powerful.

Let’s put these concepts into an example to help wrap our heads around it better. There are a lot of numbers and moving parts in the example. Stick with me on it, and we’ll break it down after.

Meet Bailey. Bailey is your everyday woman. She graduated from a normal college at the age of 23 and got a 9-5 job with a starting salary of $45k a year. After 2 years of working at her 9-5 and saving what she budgeted, Bailey is able to put away $20k worth of savings. She is now 25 years old and decides to start thinking about investing her money. Deciding to put that money to use in a real estate investment, Bailey buys a $100k investment house by getting a 20-year mortgage and putting a $20k down payment on a single family that cash flows $3k a year. Not bad—a cash on cash return of 15%.

Related: The Boring (& Completely Effective) Way to Build Wealth: A Case Study For Young Investors

But Bailey is smart. She decides to begin saving the cash flow in addition to her annual savings of $10k a year from her job. Just about a year and a half after Bailey buys her first house, she has another $20k saved up, thanks to her $15k in job savings and her $4.5k in cash flow from her rental. She decides to buy another house exactly the same as the first one. Now Bailey is cash flowing $6k a year from her rentals and continues to save $10k a year from her job.

After 15 months, she has enough money saved and buys another single family house. Now cash flowing $9k a year from her rentals and saving $10k from her job, she is able to buy another house just about 12 months later. This same pattern continues, and by the time Bailey is 35 years old, she owns 14 rental properties that produce a monthly cash flow of $3,500. Some of her properties have gone up in value through appreciation, making her total portfolio worth $1.5 million. She has been paying down her 20-year mortgages this whole time, and because of that, at age 35, her portfolio has $535k in equity.

Bailey now sees the power of exponential growth and the power it has in real estate. She decides to do a cash-out refinance on the equity in her portfolio. The bank allows a 75% loan to value, so she is able to pull $160k out after paying off the existing debt. She then takes the $160k and uses it to put a down payment on a $800k apartment complex. This complex produces the same 15% cash on cash return and therefore produces an additional $24k cash flow annually, or $2k a month, for Bailey.

In this example, Bailey initially invested $20k and an additional $10k a year from her job for 10 years. All the other money came from the cash flow the properties produced. Because of that, Bailey now cash flows $5,500 a month and owns $2.2 million in real estate. Bailey decides to enjoy her mid-30s and quits her day job. She is content with the property she has and doesn’t want to buy more. She lives on the $5,500 a month and pays zero income taxes due to depreciation.


After 20 years of owning all her properties, Bailey is 55 years old, her portfolio is 100% paid off, and it has appreciated to being worth $3 million. Although her portfolio has treated her well, she is ready for something easier. She sells the portfolio for $3 million in a 1031 exchange and buys a $12 million A-class commercial building that CVS rents under an NNN lease, where her involvement is hardly required. That property produces a 5% cash-on-cash return, which is a nice check of $12,500 a month that Bailey gets to live off for the rest of her life while trading hardly any of her own time.

Bailey dies at the age of 85, leaving her heirs with a free and clear commercial property now worth $15 million. Her family will have the wonderful luxury of financial freedom because of the initial $20k investment bailey made when she was 25 years old.

This example has a lot of moving parts, so let’s break down some of the many benefits and actions Bailey was able to achieve by starting young and using the most valuable asset of time to her advantage.

Less responsibility in life allows the ability to save.

One benefit of beginning to invest young is the lack of responsibility. Think about it—when we are young, we often don’t have kids who depend on us, parents who are getting older and need our help, and all the other expenses and time commitments that come with the next chapters of life. All those things can be great experiences if you have time and money to deal with them, but they can be extremely overwhelming if you don’t.

Related: How to Start Investing In Real Estate at a Young Age (or a “Young at Heart” Age)

In our example, Bailey was 25 years old, working a 9-5 job, making an average salary. Because she didn’t have the other responsibilities that often come with the next chapters of life, she was able to save the $10k a month and live off of $35k a year. This may not have been possible if she had started to save at 45 years old.

5 Lessons We Can Learn From This Story

Reinvesting cash flow utilizes compounding interest.

Bailey utilized the power of exponential growth to the fullest by taking the cash flow from her rentals and reinvesting them into more rentals that in turn produced even more cash flow. It took Bailey 18 months to go from house #1 to house #2, but only 5 months to go from house #13 to #14. This increase in velocity is 100% a function of exponential growth.

The more time we have as investors to let this powerful equation do its work, the greater the results can be. On the surface, Bailey continued to live the typical life many of her peers did—working the 9-5, getting raises now and then, saving some of her income for retirement. The difference is Bailey’s savings were being deployed into real estate instead of the more standard 401k. My point is, Bailey didn’t live a crazy life or get super lucky to live the life of financial freedom she had. She simply utilized time to her benefit and let that powerful factor do the work for her.

Loan amortization happens over time.

In real estate, time is working to your advantage in several channels. While one is certainly the cash flow that we all love, another is the loan pay down. Bailey was able to scale up to apartments and then commercial triple net lease property using the equity in her properties. Much of that equity was accumulated through the monthly mortgage payments chipping away at the principal amount owed to the bank on her properties.

All of these mortgage payments are, of course, covered by the rental income and therefore were never a financial burden to Bailey—rather, just an expense before her cash flow. Because she had time to let the properties’ debt be paid down, she was able to reap that massive reward. Without time, this fantastic benefit cannot work.


If you play the long game, you’ll likely benefit from appreciation.

Not always, but frequently—and if purchased correctly, managed correctly, and with a bit of luck—the majority of real estate tends to increase in value when looking at large chunks of time. Sometimes appreciation keeps pace with inflation, sometimes more, and sometimes property goes down in value. In our example, Bailey experienced very moderate appreciation simply by holding the properties for such long periods of time like many investors do. This is yet another benefit of utilizing time to allow the natural forces of the market to behave in ways that may benefit you as the investor through appreciation.

Starting early affords the option to time market cycles.

Although not specifically mentioned in the example, another massive benefit starting sooner rather than later and having more time is being able to have more flexibility in you choices of when to buy and sell. If Investor X is starting in real estate with the goal of retirement and financial freedom, in 5 years he may have no choice but to buy now and buy fast, regardless of market conditions.

If Investor Y has 30 years to reach the same goal, he has more flexibility to time his purchases throughout market cycles to the most advantageous timing. In our example, maybe Bailey noticed the slight appreciation she had achieved in her 14 houses and decided now was the time to cash out refi while the market was being good to her rather than wait and potentially see a dip down in value. Because she had time on her side, Bailey could be patient and strike while the iron was hot.

Your Story Can Look However You Want it to

It doesn’t matter if you’re 65 or 25. The time you have is the most powerful asset you control. By taking action toward financial freedom now rather than later, you are setting yourself up for the true prize of freedom of your time. Our example with Bailey is a very achievable, easy-to-implement strategy that anyone can do. The example is very conservative and has Bailey fully retired at age 35. If Bailey’s example of living off $150k a year isn’t enough for you, that simply means you up the velocity of the money, the cash input, or the time you spend continuing to grow your financial freedom number.

Your story can look however you want it to, but it’s time to realize with each day you are not taking action, you are losing some of the most valuable assets you control. For my peers who are in the younger generation, you are sitting on a goldmine of time. Don’t let it go to waste. Do something now to set the wheels of exponential growth in motion. That can be real estate or any other investment. Just realize that you have nothing to lose and so much to gain.


Related: Why Elite Investors Know Exactly How Much Their Time is Worth

The Real Benefits From All of This

The obvious and glamorous benefit to this idea of starting sooner rather than later and harnessing the power of time in your investing is the financial success. Being rich, raking in the big bucks, buying whatever you want! But financial success is only a pawn in a much bigger, more important game of freedom of time—the ability to do what we want, with whom we want, where and when we want to. It could mean that you get to spend every morning with your kids before school making sure they get a good start to the day or being able to spend quality time with loved ones before they are gone. It could even mean the simplest things, like being able to go the gym at 2:00 p.m. because that’s what time of the day you enjoy exercise most. Being able to do all of those things while still fulfilling the many other important needs and luxuries that we all want for ourselves and our family is what this all is about.

This game of life we are all playing in is about time. On your death bed, do you think you will be lying there thinking, “I wish I had just one more million to spend?” Of course not. You will be cherishing the things you have and have experienced and wishing you had time for just a few more. The thing so many keep missing is time itself is the key that can give us the power to have true freedom of time. Harness it.

[Editor’s Note: We are republishing this article to help out our newer readers.]

Investors: What do you think of this assessment? When did you start investing, and how has time affected your returns?

Let me know your thoughts with a comment!

About Author

Jered Sturm

Jered Sturm is co-founder and director of sales and marketing at SNS Capital Group. Jered began in the real estate industry in 2006, working for a successful real estate investment company as a handyman. From 2009-2012, Jered co-founded the construction company Sturm Properties. Using his background in contracting and construction, he began investing in “Value Add” real estate. Now, after co-founding SNS Capital Group, Jered has conducted over 10 million dollars in real estate transactions. He currently co-owns and operates a portfolio worth over 3.7 million dollars in investment real estate.


    • Nathan Richmond

      Percentages might be a tad aggressive, but the concept is there and the idea is sound. At least it better be! Unfortunately I got started a little late and at age 37 with 4 properties, I’m hoping to meet these goals as soon as possible.

      Very nice article.

    • Jered Sturm

      Thank you for bringing this up because other readers may be thinking the same thing. I often hear these types of comments from investors living in the coastal markets like California or New York. However, I can tell you in the midwest and southeast where I invest 15% is not only doable but normal.
      I see you’re from Arroyo Grande, California where the median home price is $665k. Where I was raised and invest is Cincinnati Ohio the median home price is 134K. My example in the article is based on my own experiences in Cincinnati. A 100k house in Cincinnati can and does rent for $1500-$1700 a month.
      Becuase I don’t want readers of my article to be discouraged when reading your comment I will break down my example into even more detail. Bailey’s properties all rent for $1600. She has to pay her monthly mortgage of $495 ($80,000 borrowed at 4.25% for 20 years fixed). That leaves her with $1,105 to cover operating expenses. Being conservative let’s say her operating expense ratio is 53% This means her Property taxes, insurance, management, maintenance, cap ex-reserves, and all other operating expenses are $855 a month. So after paying her debt for $495 and her operating expense of $855 She is left with $250 a month in cash flow or $3000 annually which is how the 15% COC return in the example is very achievable.

      • Bryan Blankenship

        Great examples man! Living 20 mins away from where you lived, the 15% is an easy target to hit. We sell CA investors 4 unit buildings all the time with $2200-2400 in gross rents and sell them at $140-160K. SFR works, small MF works. In Cincinnati, as well as the rest of the midwest, it’s very easy to make these numbers work 100%.

        I can speak to every part of this formula and back it up as valid. I started at 23, could have retired by 30, retired for a few months at 35 and became bored, and got back to work on bigger picture stuff. I still love what I do to this day or I wouldn’t do it. But as for time freedom, I do 100% of what I want, when I want, with zero constraints of any kind.

        Great articles as always, love reading them 🙂

  1. Excellent article! I have the “wealth is measured in time, not money” statement at the top of all my P&L’s. Buying my freedom was my number one priority at the start of my 25-year career in corporate America.

    Financial freedom means a variety of things to people, but to me it is the freedom to pursue your dreams and do what you want in life. Most young people are not long-term thinkers, so it’s difficult for them to visualize how they could live life 20-years down the road.

    “Building wealth is a Marathon, not a sprint. Discipline is the key ingredient.”

    Thanks for a great article!

    • Jered Sturm

      I see you’re from New York. I am going to have to copy and paste my response from above:

      Where I was raised and invest is Cincinnati Ohio the median home price is 134K. My example in the article is based on my own experiences in Cincinnati. A 100k house in Cincinnati can and does rent for $1500-$1700 a month.
      Becuase I don’t want readers of my article to be discouraged when reading your comment I will break down my example into even more detail. Bailey’s properties all rent for $1600. She has to pay her monthly mortgage of $495 ($80,000 borrowed at 4.25% for 20 years fixed). That leaves her with $1,105 to cover operating expenses. Being conservative let’s say her operating expense ratio is 53% This means her Property taxes, insurance, management, maintenance, cap ex-reserves, and all other operating expenses are $855 a month. So after paying her debt for $495 and her operating expense of $855 She is left with $250 a month in cash flow or $3000 annually which is how the 15% COC return in the example is very achievable.

  2. Mike Dymski

    Well said. Many experienced investors will say they wish they would have started sooner or gone faster.

    Many investors can invest passively and get low double digit returns (at a minimum); so, 15% is both doable and the minimum threshold for many direct investors. Direct REI is too much work to not achieve outpaced returns.

  3. Bryan Drury

    As an older investor I can say from experience that you are dead on target.A lot of young people but not all start opening their eyes at age 25. You blink once and your age 35. Blink twice and your 45.Blink 3 times and you’ve hit 55.Father time stops the bus for no one.The financial decisions or lack of them that one makes when younger will have a drastic impact on a persons lifestyle in their later years.I wish more younger people had your mindset and insight. Well written article and I hope it triggers more young people to stop and think about the huge advantage that lays before them.Will you take advantage of the opportunity young people???????

    • Jered Sturm

      Bryan Thank you for writing this comment. I can scream this stuff from the mountain tops but do to the fact that I am only 26 many people shake their head and don’t take it as serious. Your experience and backing brings validity to my argument in ways I can not do alone. Thank you for posting!

    • Jered Sturm

      You got the message early. You will do just fine! Best of luck on the journey I think what you will find is you may just enjoy it so much retirement may adopt a new definition for you. For me, the journey is the fun part ending it would only take away from my fulfillment. Thanks for the comment!

  4. Aaron Bry

    Great article Jered! Helps me keep motivated to stay on track. I am 22 and just purchased my first home (primary residence) but will move on to a second purchase and begin renting this one out by early 2018. Californias market isn’t as friendly as your numbers in Ohio, unfortunately, but I still think I can make it work. Average prices around my area sell for roughly $300K (3 bed, 2 bath, 2 car garage) and rent for $1700-2000 a month.

    • Jered Sturm

      Good for you Aaron. Time can cure those lackluster returns you all have in Cali. Or you may realize there is a big world and your California money can buy elsewhere if you choose. You are wise to be even thinking of this at 22 you will do great. Keep up the good work.

  5. Christian Bors

    I really enjoyed his article. Coc of 15% is very doable, however it might be more difficult to continually buy 100k each year due to appreciate/inflation. With that being said, rental rates will also increase accordingly. In the end, both are irrelevant. The point is start young and take advantage of expontential growth and compounding interest. I really enjoyed this article. Good stuff!

  6. Maureen McCarty

    A great article and especially important for young people setting their priorities. I couldn’t agree more. One issue, however, is that this assumes the investor can keep getting financing to keep adding properties. Do you find that is still doable in today’s banking climate? If financing is a problem, how would you suggest one keep financing additions to his/her portfolio?


    • Jered Sturm

      Great questions Maureen. These can be hurdles but very easy to work around. There are hundreds of ways to get around this hurdle. The easiest is stop using the big banks and start working with local banks. It’s a completely different game.

  7. Harley Hollenbeck

    Can’t remember who said it but compounding interest is one of the easiest things to explain but hardest to understand. Your example does a great job helping us understand and who cares if some of it is idealized, time is the message! Though, I’m having a hard time pulling the trigger on the first property due to the “what-ifs”…. Keep the big picture in mind and go… needs to be my mantra!ha Thanks

  8. NA Green

    Great article! I started at 31 and now 23 years later I have more flexibility in my IT Corporate Career as layoffs, cut in pay, and the economy ups and downs have impacted my job income over the last decade. Now, due to cash flow (and appreciation), I can take on part-time IT contracts and earn my time freedom back. I haven’t looked at a NNN commercial property yet. I may save that for the next decade as I learn where my heir stands and lives since he is only 18. When I started it was my retirement plan and over time I have added generational wealth. Nice to see GOD bring a plan together over time.

  9. Thomas Mundy

    Thanks for this inspirational post. I’m 25 and about to buy my first 75K primary residence with the idea of renting it out in a few years. I’ll be able to save up 9K for more properties and an additional 6K for retirement per year on a 65K salary living in NJ. If my numbers are correct I should be making a similar return to the article when I rent out the property in buying. I really hope I can continue on a similar path as the person in your example. I like my day job but I suspect I won’t want to work when my income is replaced.

  10. Casey Murray

    Powerful and well written article, Jered. Loved your recent podcast on BP also. The other beauty to real estate aside from financial freedom is the relationships you develop with tenants, fellow investors and the like. Real estate is an asset that not only helps achieve your financial and personal goals but also enriches the lives of others.

  11. Amber Porter

    You can invest in your lifespan too. There are ways to add years to your life, especially if you have bad habits you can quit. But researching the diet strategies that add to your longevity, investing in those foods, investing in stress reduction, positive mental outlook, exercises that benefit the body and not degrade it, supplements, can all be looked at as investment tools since it enables you to work and save more years, reduce costs of adult diseases, etc. Not a guarantee it adds to your longevity, but without the risk there is no reward!

  12. Stone Pinckney

    I turn 28 next month – this gave me a strategy to leave a legacy. My favorite part was the simplicity of doing this while working FT. I’m not a real estate entrepreneur – I want to work FT and invest in RE. I’m in a sales internship that could turn into a job offer when I graduate. Working a few years here and investing wisely can set me and my family up well for decades. Your articles rock!

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