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If you haven’t already done so, the best time to start saving for retirement is now!
Usually in your 20’s, you’re in college or you’re starting a new job or even starting a family. And, while you may get advice from many different people telling you to enjoy your 20’s, no one really ever tells you to start saving. I personally don’t remember anyone telling me the importance of saving money when I was younger much less teaching me how to save or even about compound interest.
Compound interest??? Compound interest is the interest you earn on your initial investment plus the interest you’ve gained. For example, let’s say you have $1,000 in a savings account and the interest rate is 3%, then at the end of the year you will earn $30 in interest. The following year, you will earn 3% interest on your initial investment amount plus the interest you earned.
Now imagine if your rate of return was 10% and if you had made additional monthly investments! How much more interest would you have earned with a higher interest rate and what would your balance be? Luckily, we can figure that out by using a compound interest calculator and learn how much we need to save and how much we can grow our money.
It’s important to know that taking advantage of compound interest can lead to a very comfortable retirement. And, if you begin to save and invest when you are young, you will have a lot more time to build and watch your money grow.
Even if you find yourself starting to save at age 40 or even 50, it’s not too late. You may have to play catch up and likely make larger investments to reach your goals though. The good news is, if you happen to have a good size chunk already saved, there are investments you can take advantage of that will give you guaranteed income in retirement.
If you’d like to get more information on how you can grow your money, let’s set up an initial consultation and discuss your financial goals.