The Story of Two Brothers Investing

The story of two brothers is one of the first articles I read which motivated me to become a serious investor. This story also got my wife on board with investing. Every young person should read this.

This story makes older folks weep and young people rejoice. The lesson is painful for anyone who did not invest when they were young but the principles of compound interest are applicable at any age. A 65 year old person may still have a 30 year investment time horizon ahead.

I have annotated the story to help explain why it turns out the way it does.

The Story of Bob and Andrew

Andrew starting saving at age 20. He saved $2,000 a year for 8 years. Bob started saving at age 29. He saved $2,000 a year for 31 years. Both were making 10% on their investments.

The end result doesn't need much explaining.  Andrew comes out way ahead despite investing very little because he makes more money in interest than Bob starts investing at year 9.  The key to good investing is to start early and get a good interest rate.  The investment growth is not so amazing if they don't make ten percent.  If Bob gets a better interest rate than Andrew than he could catch up.