If you have or haven’t noticed, I’ve been writing more about personal finance recently on Take Your Success.

This is because I believe that it’s never too early for you to gain financial wisdom and to start investing. The sooner you have a solid foundation in personal finance, the quicker you can become rich and be financially secure.

But, as you’ll see in my interview with Neal Schmidt, many young adults decide to spend their money without a purpose and put off investing for later. And in doing so, they lose one of the most important investing advantages: time. Then these same people start investing in their 30s, but can’t make up the tens to hundreds of thousands of dollars lost from stunting the power of compound interest.

To help you out, I decided to interview Neal because he has experience investing in the stock market at the early age of 12, is clearly passionate about the subject, and promises to give you significant value.

Remember to check out my key takeaways after the interview. Now let’s hear from Neal Schmidt.

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Brian: How old were you when you started investing? And what attracted you to this at a young age?

Neal: I began investing when I was about 12 years old. My father showed me an article that aimed to highlight the power of compounding interest. The article was about two people who were investing in a Roth IRA. The first person, who I will call Paul, began investing at 22 by putting $1,200 per year into his Roth IRA. The next person, Mike, began at age 30 or so and put the maximum contribution every year until retirement (was $5,000 at that time).

Despite the difference in principal both had been adding to their retirement accounts, by the time both reached the retirement age of 59 1/2, Paul’s account (who started investing earlier) still contained a few hundred thousand dollars more than Mike’s. While I know these numbers are not exact, the point remains. It just goes to show that there is no substitution for time when investing.

Brian: Who did you learn and get inspired about personal finance/investing from?

Neal: My parents were undoubtedly the driving force in getting me interested in personal finance. It was frequently the topic of discussion around the dinner table, and my Dad would always reference things he heard on The Dave Ramsey Show or read in the book “The Millionaire Next Door.” He would always talk about how it is a huge misconception that “the only wealthy people in the world inherited their money.”

In “The Millionaire Next Door” Thomas Stanley and William Danko state that 88% of America’s millionaires are first generation wealth, meaning they inherited NOTHING. That fact really stuck with me and made me realize that attaining a little wealth is not impossible.

Now, my goal isn’t to become a mega millionaire, but I certainly would like to live comfortably, be able to send my children to their dream college and have something left over to give back to society. As Dave Ramsey always says, everyone has the ability to change their family tree, and I would love to do that.

Brian: How does investing at an early age, for you an extremely early age, make such a big difference?

Neal: As I said earlier, there is no substitute for time when investing. The best time to start investing was 10 years ago; the next best time to start is today. Compounding
interest is an incredible thing. When started early, retirement accounts such as a Roth IRA, Roth 401k or standard 401k can reach the high “hundreds of thousands” and in some cases even grow into the millions.

The biggest pieces of advice I can give to someone who is beginning to think about investing are start saving for retirement as soon as you are out of debt, and when you make that IRA or 401k contribution, forget that money even exists.

The worst thing you can do for your retirement is pull money from those accounts early. Not only will you incur stiff penalties, but you will be losing out on the compounding interest that money would have gained if it was left alone.

Brian: What’s your investing strategy?

Neal: Being only 22 years old, I’m an aggressive investor, since retirement is so far off. I am currently invested in 100% stock based mutual funds. Earlier I had made a statement about making contributions to retirement accounts and “forgetting” about them. That is because if I woke up tomorrow and there was a huge downturn in the market causing the value of my mutual funds to plummet, I really wouldn’t be that worried, since there is so much time for the market to recover before I even think about retirement.

Despite the Great Depression and Great Recession of 2008, the stock market has always trended upwards, and depending on which resource you ask, its historical rate of return is somewhere around 7 percent.

As I move closer to retirement age and my retirement accounts have grown to a more substantial size, I will move to more a moderate/conservative investment strategy. Until then, I am willing to be a more aggressive investor in order to gain the highest rate of return I can. The higher the risk, the higher the return.

Brian: Do you strictly invest in the stock market, or are you pursuing other investment areas like real estate?

Neal: Currently, I am focused on maxing out my Roth IRA contribution, contributing to my 401k and building a safety net that I am comfortable with. Many people, including Dave Ramsey, consider 3-6 months of expenses to be a sufficient safety net, but in my opinion, that amount should be whatever makes you feel the most comfortable.

Once I have that safety net built to a level that I am comfortable with, I will absolutely look into real estate investments. Having a rental property is a great way to add a supplementary income, but personally, I would not buy a second property to rent unless I had enough to pay for it in cash. I don’t see the sense in taking out a mortgage on a property in order to rent it to someone else.

Brian: How would you assess most twenty-somethings with their money? And why do you think people our age act this way?

Neal:  Most people our age aren’t too concerned with their retirement. When I ask about retirement savings, often times I hear, “I have tons of time to save for retirement later.” Or “I want to have fun with my money when I am young.”

A lot of this kind of mentality stems from people feeling entitled to new things because they worked hard during college. I know so many people who went out and immediately bought a new car when they got their first professional job; hell, I almost did it myself. I almost bought a 2015 Mazda 3, on which I would have had to take out a $15,000 loan.

Sure, I absolutely could have made the monthly payments on it, but then I would have been putting a huge burden on my monthly take home pay. I wouldn’t have been able to contribute to my retirement, which would have cost me tens of thousands of dollars in retirement income. Just because you can afford something does not mean you should buy it.

Another part of that mentality is that I feel like many people our age do not understand the impact of compounding interest. Let’s take a look at a Roth IRA, for example. If someone were to start maxing out their yearly contribution ($5,500) at the age of 22 until they are 60, they will have paid $209,000 in principal over 38 years.

That sounds like a lot until you take into consideration that you can expect the value of that account to be upwards of one million or more, depending on the rate of return. Compounding interest is an amazing thing, especially if taken advantage of early on.

Brian: What advice would you give to young adults who don’t know where to start with their money and investing but want to become millionaires?

Neal: Read the book “The Total Money Makeover” by Dave Ramsey. I have been name dropping him a lot during this interview, and that is because I truly believe in the debt free lifestyle he promotes. I find his advice to be practical, easy to understand and downright effective.

This book has completely changed the way I look at my financial decisions, and the way Mr. Ramsey explains things makes personal finance seem much less daunting. Now, sometimes he can come across as a bit over the top, but overall, his message has been incredibly helpful.

Contrary to popular belief, becoming a millionaire is a choice, and if you don’t believe me, read this book or listen to his radio show. Becoming a millionaire is not about how much money you make but rather how much you save. By making wise financial decisions, living below your means and investing young, anyone can build a great financial foundation that will bring about what Mr. Ramsey refers to as “financial peace.”

Brian: Lastly, and more out of my curiosity, what are your financial goals?

Neal: Personally, I don’t have a dollar value that I am aiming for; all I am looking for is financial security. I could not imagine how I would feel if my son/daughter was accepted into their dream college, and I had to tell them “sorry, we can’t afford it.” That would crush me.

Or if I had to forgo anything but the best medical care if, god forbid, a family member ran into serious medical issues. Sure, money doesn’t make people happy, but it sure as hell makes the low points in life a heck of a lot more manageable. I don’t ever want to be sitting at the kitchen table with my wife at 4am trying to crunch numbers to figure out how we will keep the lights on, a roof over our heads or food on the table. I don’t want that stress on me, my family or my marriage.

People may call me crazy, paranoid or weird; that’s fine. Those are the things that cause me to be so passionate about my personal finances, and I know that if I start preparing now, I will never have those worries.

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Neal and I have similar beliefs when it comes to money and personal finance. So it became no surprise to me when I shook my head in agreement multiple times throughout this interview.

One of my favorite amen moments is when Neal said, “Just because you can afford something does not mean you should buy it.” I think he hit the nail on the head here!

Because the way I look at it is you can spend your money on material items (new clothes, new gadgets, or a new car) that will make you happy only for the short-term, if that. And if you spend all your paycheck each month, you’re essentially going to have to work the rest of your life. Or you can save your money and invest it, so it grows and allows you experiences that make you happy. For example, traveling the world or retiring at 40 to work on your passions.

A second great nugget, where I actually hit my fist on the table and said “Yes,” is when Neal made the comment, “Becoming a millionaire is a choice.” If the year was 1900 then you might need a famous name and wealthy parents to be rich. But in 2016, the opportunity to become a millionaire is yours if you’re willing to save your money and start investing it.

Even beyond money, I believe that success in your work, fitness, health, friendships, and love life all comes down to a choice. So how bad do you want it? Choose what you desire, follow through, and live the life you want.

Readers, do you want to start investing after this interview? What holds you back from getting in control of your money and future? Is money a topic that deserves more attention and blog posts on this site?