reason is the power
of compounding. What it boils down to is that
with compounded returns, the majority of your investment
earnings occur in the later years of your investment
period. This is because you start earning money
on the prior year's earnings. As this amount starts
to grow, the monetary increase in your investment
account(s) will start to snowball in the later years.
The last 10 years before retirement, things should
really start to snowball!
if you start saving at 20 years of age and put away
$3,000 a year and earn an average of 8% a year,
you will have just over 2 million dollars when you
reach age 70! Your actual contributions would have
wait until you are 40 years old and save $3,000
a year and earn the same 8% a year, you will have
only $400,000. Your actual contributions would have
of the gains occur in the last years of your investment
period. The earlier you save, the more money you
will have because of the power
of compounding. So you can see it is important
to start saving for retirement as early as you
emphasize enough how important it is to start thinking
about retirement while you are young. Even though
retirement seems distant and far off, one day you
will be retired. Don't be caught scrambling when
you are 40 or 50 years old with retirement around
the corner to start thinking about retirement.
yourself a big, big favor and start saving for retirement
an IRA account. Take a look at a regular
IRA or a Roth IRA, if you qualify. Find out
if your employer has a 401k
retirement plan and if they do, contribute to
your employers plan. Employer plans can have an
added benefit because your employer might help pitch
in for your retirement by matching some of your
contributions! You can contribute to both accounts
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