Mar 26, 2025
If you haven’t started investing in the stock market, you’re not alone. Nearly half (48%) of American adults don't have any investment assets, according to a 2024 report by asset management firm Janus Henderson. The reasons why included a preference for more accessible assets like cash, being in debt or not understanding how to invest.
Furthermore, while a poll by CNBC and Generation Lab in 2024 found 63% of Americans aged 18 to 34 believe the stock market offers great opportunities to build wealth, many are not participating, and 61% are not saving for retirement each month.
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If you’re 32 years old and haven’t begun investing yet, you may have spent the first decade of your career missing out on a great opportunity to generate wealth. But it's not too late to get in on the action. Here's why it matters if you start investing early, and how you can get started.
The importance of investing early
One reason many people end up with little savings by the time they retire is that they don’t start early enough. But at 32, you have one huge thing going for you — time. The sooner you start investing, the more time your wealth has to grow. So, it’s important to take advantage of your age.
Let’s imagine you start contributing $500 a month toward retirement at age 32, and you continue to do so until age 67. Let’s also assume that your portfolio generates a yearly 7% return, which is a bit below the stock market’s average performance.
After 35 years of compounded returns, you'd be looking at a nest egg worth about $830,000. That’s over four times the median retirement account balance among Americans of that age group, according to Federal Reserve data.
But if you had waited to start investing at age 42, for example, generating that same yearly 7% return, by age 67 you’d have about $380,000. Even though you contributed $60,000 less income over 10 years, that missing $450,000 is the cost of lost time compounding gains.
It's also important to invest at a young age in order for your savings to outpace inflation. As the purchasing power of a currency erodes over time, it helps to earn more than any value lost.
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Investing for the first time
Investing for the first time? You'll want to find the right home for your investments, and your best bet is to first exhaust tax-advantaged accounts before moving on to taxable accounts.
If you have access to an employer-sponsored 401(k) retirement plan, at age 32, you can contribute up to $23,500 of your salary, pre-tax. Furthermore, if your employer offers a contribution match program you should take advantage of it as much as you can, as it's essentially free money. These plans generally come with investment options so you can choose from a list of where to invest your savings.
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You may also want to put any savings into an individual retirement account (IRA), which has a contribution limit of $7,000 if you're 32 years old. Traditional and Roth IRAs have distinct tax advantages, but funds in either type can be invested in the market.
If you're able to max out an IRA or 401(k) and have funds to invest beyond that point, you can turn to a taxable brokerage account. There are no annual contribution limits associated with taxable brokerage accounts, however, any contributions are made with after-tax funds.
From there, it's a matter of figuring out your risk tolerance and where to put your money. But one thing even the experts agree on is the importance of maintaining a diverse mix of assets within your portfolio so you aren't as vulnerable if any investments go south. You can achieve this by buying stocks across a range of industries, or even blending in non-stock options such as bonds.
One way to make things a little simpler is to invest in index-tracking exchange-traded funds (ETFs). These can give you access to a range of publicly traded companies. For example, an S&P 500 index fund can give you a piece of each of the top-performing companies on the U.S. market. Legendary stock-picker Warren Buffett himself recommends index funds for everyday investors.
Keep in mind, however, the stock market has both good years and bad years. Even though, historically, the S&P 500's average annual return rate is above 10%, past returns don't guarantee future gains. But the longer you're invested in the market, the more time you have to realize gains and recover from losses, which is another reason youth works in your favor.
If you're still unsure, it's not a bad idea to talk to a financial advisor, especially if you don't know much about investing and are worried about making poor choices. An advisor can help you make the most of your portfolio so it grows enough to allow you to meet your financial goals.
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Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
