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Hopefully yours edmond7/30/2023 Past performance is not an indication of future performance. Additionally, they do not reflect the many types of investment risks, expenses or charges associated with any actual investment. All figures are for illustrative purposes only and do not reflect an actual investment in any product. The Rule of 72 is a mathematical concept that approximates the number of years it will take to double the principal at a constant rate of return compounded over time. That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact). Assuming the interest rate is compounding annually, the answer is approximately how many years it will take for money in an account to double.įor example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this: Never heard of it? Here’s how it works: Take the number 72 and divide it by the annual interest rate. A useful shortcut to figuring out how long it would take money in an account to double is the Rule of 72. The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.īut what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in… So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. Month.Ī savings plan that aggressive may not be feasible later down the road. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen? Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Here are 3 big advantages to starting your retirement savings early… Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?Īs the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.īut there are a couple of things that, if started early in life (and with copious amounts of caffeine, if you’re starting early in the day, too), could benefit you greatly later in life.
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