Start Saving Now
This example has been given many, many times, but it makes such a great point. Investor A contributes $2,000 from age 26 to age 65 (40 years, $80,000 contributed); Investor B contributes $2,000 per year from age 19 to age 25 (7 years, $14,000 contributed).
Who ends up with more money at age 65? By contributing early, Investor B ends up with $36,937 more than investor A, even though he contributed $66,000 less of his own money. So start saving now!
Cat said,
June 24, 2008 @ 9:05 am
Unfortunately I don’t know the interest rate this is compounding at and don’t feel like calculating it. The lesson is the same no matter what the rate is. Saving early will get you the most growth for your money.