Money Math - Discover the Power of 72

Money Math - Discover the Power of 72

Every young person (and the young at heart) should understand compound interest and the power of 72 before they begin earning, investing and spending.

Compound interest is interest that accrues based on the total balance of principle and accumulated interest. The earlier you start saving, the more you will benefit from compound interest.

Here’s an example of two friends, Grace and Drew, who had different saving strategies. Grace saved $1,000 a year for 10 years, starting at age 25. Drew saved $1,000 a year for 25 years starting at age 40. Both earned the same 8% return. Who ended up with more money at age 65? Grace benefited from her head start and the power of compounding because her $10,000 grew to $157,435.17, whereas, Drew’s $25,000 grew to $78,954.42.

Plan For Your ‘Someday’ With These 3 Easy Ways To Save

Plan For Your ‘Someday’ With These 3 Easy Ways To Save

Written by Tammy Greynolds, America Saves

Working hard, paying bills, and putting money aside for your needs and wants in the “now” are so often automatic in our day-to-day lives – so why aren’t we thinking about or planning for the future? According to the 2015 Retirement Confidence Survey from the Employee Benefit Research Institute, nearly one-third of workers have almost no retirement savings or investments (< $1,000), and a staggering 57% are underprepared with less than $25,000 for retirement.