Understand the Compounding Effect Of Money

There isn't a much more important concept to understand when it comes to investing.  The principle is basic but often overlooked.  It goes something like this:

You invest $100 today.  The investment grows by 10% to $110 by the end of the year, or $10.  Next year, instead of growing $10, it grows by $11 ($110 x 10%) to $121.  The year after that it grows by $12 to $133.  By year 10, your $100 is worth $260 and by year 20 it is worth $672.  In 30 years that $100 is worth $1745 and is growing by $175 per year.

The point to take away is that invested money grows much quicker over time.  The growth actually accelerates and that is why it is so important to start investing early, because a dollar invested today is worth multiples of that years from now.