Our son Nathan is living the dream of every parent. Good kid. No trouble with the police. College graduate with two majors in less than four years. Great job with a leading Wall Street firm. Debt free. And he's just 22 years old - well on his way to becoming fabulously wealthy. In fact, he is on track to be a multi-millionaire with just a $20,000 investment. How is he doing it?

Simple. Time, discipline, and a 401K tax-deferred plan. Now wait a minute. Surely this is too good to be true. Au contraire!

Nathan is investing $4,000 his first year in his company's 401K plan. Not including the company match, at 12% annual return, the first year investment will grow to $585,670 in 45 years. What a terrible mistake he's avoiding by doing what most people don't do - invest at the age of 22.

If Nathan invests $4,000 five years in a row, beginning at the age of 22, his investment (with a 12% return) will grow to $2,364,554. Imagine - the cost of not investing $20,000 results in a loss of $2.4 million. Amazing! If Nathan keeps up the $4,000 investment for 45 years, his portfolio will be worth $5,432,920.

Presto! A multi-millionaire! That's our boy. We are very proud of Nathan's actions. We've hammered this message home to our kids for several years.

The time value of money. Do your kids know about this and are they doing something about it?

The message has not yet sunk in with Nathan's twin sister. Maybe she will get it next year. But this year she lost $585,670. Ugh!

Pierre Cutler
The Sacramento Executive