There are lots of lessons that we end up wishing we'd learned earlier. For example: Taking care of our health is important, saying "yes" more often can lead to good developments, and holding on to grudges isn't worth it.

Some life lessons, though, are financial in nature -- and not learning them soon enough can result in missing out on amassing many thousands of dollars and ending up with less financial security later in life. Below are three important lessons I wish I'd learned sooner.

Two hands holding up a sign on which is written the question "Did you know?"

Image source: Getty Images.

No. 1: You can amass a lot of money, even if you don't earn much

I suppose I'd always known that one could invest money and increase its value, but for a long time, I just assumed it didn't really apply to me. That's because I was earning relatively little and didn't have thousands of dollars lying around. I wish I'd known back then that even small sums can grow into large ones, given enough time. (And back then, decades ago, time is what I had a lot of.) Check out how a single $500 investment grows over time, at 8%:

After these years

A single $500 investment grows at 8% to:

1 year


5 years


10 years


20 years


30 years


40 years


Source: Calculations by author.

See? That's the magic of compounding. Any small investment you might make while you're young and not earning much can grow more than 10-fold over 30 years, and 20-fold over 40 years. Sure, 40 years is quite far away. But if you're 24 years old, you'll be only 64 in 40 years -- prime retirement age.

The table below shows how you can amass a lot by regularly investing various modest sums:

Growing at 8% for

$1,000 invested annually

$3,000 invested annually

$5,000 invested annually

5 years




10 years




15 years




20 years




25 years




30 years




Source: Calculations by author.

Aim to increase how much you sock away whenever you can, as your income grows over time, and you'll amass even more.

No. 2: Learn more, to make fewer mistakes

It's not just enough to be socking money away, though. You should be doing so in the most effective ways possible. For many, if not most, people, that's the stock market. Unfortunately, many beginning investors make mistakes -- several of which may never even get corrected, if there isn't continual learning going on. These mistakes can be quite costly.

Here are some of my own early mistakes:

  • Being impatient and jumping in and out of stocks too rapidly. That tends to generate a lot of trading commissions, and it doesn't give many great stocks a chance to perform for you, either.
  • Selling too soon. Many times, I sold out of a stock after making some money in it. What's wrong with that? Well, some of these stocks were ones like Sure, it's nice to double your money, but staying invested for many years in a strong and growing company can get you much more gain than that.
  • Investing in too many companies. If your money is spread out across 50 or 60 (or more) companies, it's going to be hard for you to really follow them well, keeping up with their news and reading through their quarterly and annual reports. Also, if one of them soars, it will probably not make a huge difference to your portfolio.
  • Not really researching companies before investing in them. That's a good way to end up surprised, when a competing company is stealing market share or a low stock price turns out to be because of an accounting scandal.

No. 3: Keeping it simple, with index funds, is often best

If the mistakes above make you think that investing in individual stocks is a lot of work, you're right. It shouldn't be taken lightly, as you're deploying your precious hard-earned dollars and are building up a needed war chest for a down payment on a home, college costs, or your retirement.

Fortunately, there's an easier way: index funds. A low-fee, broad-market index fund, such as one based on the S&P 500, will instantly have you invested in about 500 of America's biggest and best companies, which together make up about 80% of the overall market's value.

Index funds tend to outperform other mutual funds, too. According to the folks at Standard & Poor's, for example, as of the end of 2018, 89% of all domestic stock mutual funds underperformed the S&P 1500 Composite Index over the past 15 years. And 92% of large-cap stock funds underperformed the S&P 500.

Sticking with index funds for most or all of your stock market dollars isn't any kind of surrender or wimping out. You'll stand a good chance of outperforming those who pick individual stocks -- even professional money managers. None other than super investor Warren Buffett has recommended index funds for most people, too.