Time Value of Money

Let me give you an example of how time can save you $52,000 and make you $220,000.

Invest $2000 a year for nine years and start at the age of 21. On a 10% interest rate, the initial $18,000 you invested will be worth $763,000 by the time you reach the age of 65.

If you have a friend who waits until he/she is 30 to start saving and they save $2,000 a year every year until they are 65 which is a total of $70,000, they will only have $542,048.73, a difference of $220,000 from the person who started at the age of 21. Time is definitely on your side, so start early! Imagine what it would be if you started saving even earlier than 21!

What if I have $10,000 invested at various interest rates? After 20 years this is what I would have.

$194,607 vs. $21,911: which do you think is better?

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