The Fastest Way to Save $ 1 Million
Read one article on personal finance and you know that compound interest is one of the most important reasons to start saving and investing early. Well, in theory. You’ve heard that if you start investing in your 20s, you will have $ 1 billion more than if you start in your 30s. Or something like that.
It is true that starting early helps you make more money. Take this simplified example:
Let’s say you are 25 years old and start investing $ 3,000 per year in an account over the next 40 years with an annual return of seven percent. By age 65, you have deposited a total of $ 120,000, but your account will have grown to almost $ 700,000.
Now let’s say you are waiting until you turn 35. Even if you are investing $ 5,500 a year, not $ 3,000, until you turn 65 with an annual return of seven percent, you end up with just under $ 600,000.
Start early, save less each year, and you end up with $ 100,000 more. Not bad.
Okay, that’s all good, but what does it actually look like? This video will help you see the difference. We’ve outlined steps to help you save and profit from compound interest so you can be a millionaire by the time you retire. It’s not a billion dollars, but not bad either.