Invest 5% of Your Income Now—Buy a Home Sooner and Retire Wealthier

If you’re in your late teens or 20s, buying a home might feel like a far-off dream. But here’s the truth: the earlier you start investing, the easier it becomes—not just to buy a home, but to build long-term wealth for retirement.

In 2024, the median age of a first-time homebuyer was 38 years old. That’s the oldest on record. Do you really want to wait until nearly 40 to buy your first home? By investing as little as 5% of your income into a Roth IRA, you can speed up the process, take advantage of compounding growth, and set yourself up for retirement—all at the same time.

Why a Roth IRA Is Your Secret Weapon

A Roth IRA is unique because:

  • Your contributions grow tax-free.

  • You can withdraw your contributions (not earnings) at any time, penalty-free.

  • You can even use up to $10,000 of earnings toward a first-time home purchase without penalties.

That means the same account you’re using to invest for retirement could also help with your down payment or closing costs.

The Power of Starting Young

Let’s assume you earn $30,000 a year and invest just 5% ($1,500 per year, or about $125/month) in a Roth IRA.

  • At a 7% average annual return, after 10 years you’d have around $21,000.

  • That’s enough to put toward a starter home or reduce your loan costs significantly.

  • If you keep investing the same 5% until retirement, you could build over $450,000—on just a modest income.

And if your income grows and you keep the same percentage, those numbers could double or triple.

You Don’t Need to Be a Stock Market Expert

The best part? You don’t need to spend hours researching which stocks to buy. Platforms like SoFi and Acorns make it simple with robo-advisors (automated investing tools).

  • SoFi Invest lets you choose between automated investing (robo-traders build a diversified portfolio for you) or active investing if you want to experiment on your own.
    👉 Start investing with SoFi: HERE

  • Acorns invests your spare change by rounding up purchases, and also offers Roth IRA options with robo-investing so you can set it and forget it.
    👉 Start investing with Acorns: HERE

The Takeaway

The average first-time buyer might be nearly 40, but you don’t have to be. By investing at least 5% of your income now, you can:

  • Build savings for a down payment.

  • Get a head start on retirement.

  • Leverage automation so you don’t have to be a financial expert.

Start now. Your future self—and your future home—will thank you.

Affiliate Disclosure

This article contains affiliate links. If you sign up for SoFi or Acorns using the links provided, Path to Prosperity may earn a commission at no additional cost to you. We only recommend tools we believe can help you on your financial journey. I am not a licensed financial advisor. Investing involves risk, including possible loss of principal. Past performance does not guarantee future results. Always do your own research before making financial decisions.

Mark Crunk