The Power of Compounding

Posted at 10:59 on Sunday April 10, 2005 | Filed Under Saving

Some dumb things I have heard recently:

"I don't have any money right now...I'll invest money later"
"I'm not even thinking about retirement"
" " (no opinion of investing at all, the worst possible situation)

I've written about making your money earn money for you before. The key to being rich isn't picking the most sophisticated, tax-sheltered investment or doing fancy real-estate deals. The easiest way to get rich is to start early--even with little amounts of money. Check out the 20-second simulation with pretty pictures (from Vanguard). Click to play:

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Comments (3)

1.: Amen.

Posted by Jonathan at November 28, 2006 01:13 PM

2.: Wow, great graph, Its pretty incredible, but true.

Posted by Edwin at December 31, 2006 01:26 PM

3.: The whole trick is that you have to get that 8% interest rate.

If you only get 6.25% then Dave makes more (although he did have to put 40,000 more into the account to do it.

The bad thing is that most people starting out don't put their money in higher yield accounts, they just put it in a savings account and are not much better off than if they had hid it under their mattress.

Posted by AHFXStudios at February 3, 2007 02:48 PM

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