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With compound interest you take that initial investment and earn interest in the first year, then in the second year you add the initial investment plus the interest from the first year and earn interest on the whole amount. Now that you know the difference, let's see how two people use the force! Person A starts saving at the age of 25. Article: Ask this question to 100 people and you will receive 100 very different answers. The fact of the matter is there is no right age to start. But don’t fret (did I just say fret?) knowledge is power! To run away with a line from Star Wars, “Use the force Luke.” The force I’m speaking of is compound interest. Since our main objective is to find an ideal age to blast off saving, you have to understand the difference simple and compound interest. Simple interest can be figured by taking an initial investment that earns interest annually for a period of (let’s say) two years. consecutive the first year you have your original investment plus the interest. In the second year you have the initial investment plus the interest for the second year, the interest from the first year is not added. What you’re lacking is that you don’t earn interest on the interest you by this time earned. It’s not compounded. Can you see where I’m going with this? With compound interest you take that initial investment and earn interest in the first year, then in the second year you add the initial investment plus the interest from the first year and earn interest on the whole amount. Now that you know the difference, let’s see how two people use the force! Person A starts saving at the age of 25. They start out with a zero stack up with and contribute $200 monthly until retirement (65). an middling writing tablet rate of return of 12%, Person A can retire with $2,061,941.74. Wow! Millionaire status achieved, two-fold. Person B starts saving at the age of 40. seeing person B is further in life, we’ll take it this person started with an initial investment of $10,000 and contributes twice as much, $400 per month, with the same 12% epidemic review rate of return. Person B will retire at the same age (65) with $886,803.53. Hey, that’s not fair! No, that’s compound interest at it’s finest. J So, what are you waiting for? Put your pizza and hot dog money to unmitigated use and start saving! Your love handles will thank you for it! ForexEnterprise.com: Earn $1,000 Per Day. - The Multiple Streams of Income System - Start Making Money In Just 15 Minutes. Updated & Converting like Crazy! Starting A Child Daycare. - Complete business package to help you easily and quickly start your own profitable home-based day care business! Article Index: | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 |
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