Compound Interest: Why Starting Early Beats Saving More
2024-02-20
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Starting 10 years earlier beats doubling your savings rate. Here's the math that will change how you think about money.
The Shocking Numbers
Scenario A: Save $200/month from age 25 to 65 (40 years)
Total contributions: $96,000
Final value at 7%: $525,000
Scenario B: Save $400/month from age 35 to 65 (30 years)
Total contributions: $144,000
Final value at 7%: $489,000
Read That Again
Person A contributed $48,000 LESS but ended up with $36,000 MORE. That's the power of compound interest over time.
The Rule of 72
Divide 72 by your interest rate to find how long it takes to double your money:
- At 7%: 72 ÷ 7 = ~10 years to double
- At 10%: 72 ÷ 10 = ~7 years to double
Start Now
Every year you wait costs you. Use our calculator to see exactly how much.
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