Basic Investment Concepts
- Time Value of Money
- The Power of Compound Interest
- Dollar-Cost Averaging
- Pre-tax, After-Tax, Tax-Deferred, and Tax-Free
- The Effects of Inflation
The Power of Compound Interest
The following table shows why compound interest is such a great thing. Saving $50 a month earning a 6% rate of return, can give you a nest egg of $23,200 in twenty years. And in thirty years it can give you $50,500. Not bad for $50 a month.
The Beauty of Compound Interest*
|
Monthly Savings |
In 15 Years** |
In 20 Years** |
In 30 Years** |
In 35 Years** |
|
$10 ($120/yr.) |
$2,900 |
$4,600 |
$10,000 |
$14,200 |
|
$50 ($600/yr.) |
$14,500 |
$23,100 |
$50,200 |
$71,200 |
|
$100 ($1,200/yr.) |
$29,100 |
$46,200 |
$100,500 |
$142,500 |
* Calculations made from a standard Time Value of Money table.
** Assumes a 6% rate of return.
Still think you're too young to start saving for retirement? If you are 35 years old and save just $2,000 per year from now until age 65, at a 6% rate of return, you'll have almost $167,400. But, if you wait until you are 55 to start saving, you will have to save approximately $15,600 per year at 6% to give you $213,000 at age 65. It's better to start smaller and earlier, and keep it up.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA/SIPC. First Community Financial Consulting is a trade name of Pennian Bank. Infinex and the bank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value. NOT FDIC INSURED BY ANY FEDERAL GOVERNMENT AGENCY, NOT GUARANTEED BY THE BANK, MAY GO DOWN IN VALUE.
