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No matter how young or old you are, retirement will someday be a reality. Starting your retirement planning now will provide you the peace of mind to know that you will have the income to live comfortably in your twilight years. The sooner you start making informed retirement investment decisions and taking actions to implement these decisions, the more retirement income you will have. Time really is on your side if you start young. It all comes down to compounding. Compounding is the concept that lets you earn interest on the interest you have already earned. At first, your money may appear to grow slowly, but as time passes, your money grows more rapidly. So, the sooner you put your money to work for you (earning interest on interest), the sooner you will see the value of your retirement grow. For example, if you saved $2,000 today and were able to earn an average of 7% every year, it would be worth approximately $5,518 in 15 years and more than $15,225 in 30 years. That's the power of compounding! But if you take money out, compounding doesn't get a chance to work for you. To try another example, use the following compound interest calculator and watch your money go to work for you. It is particularly interesting to note the massive difference between the 30 and 40 year numbers. Getting started at age 25 rather than 35 can have a BIG impact! So, whether you invest in a 401(k) , stocks , bonds , or mutual funds , if you start young, y our retirement investments can achieve compound growth in several ways:
The result is that interest income keeps compounding, dividend reinvestments keep increasing, and your investment portfolio keeps growing!
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Retirement Planning
