What is compound interest and what do it truly establish? Here why you should start investing as soon as possible and not wait until your 30’s like the average American. One dominant example proves it all.
How powerful is compound interest? This should put it in perspective for you:
If you put in just $100 into the stock market at age 30 and left it alone. Assuming an average return of 7% (S&P 500 average return yearly) and reinvested everything until you were age 60 that $100 would now be worth $761.24. However, if you were to put $100 at only age 20 with the same 7% average return and reinvesting everything you would have $1,497.45 by age 60. That is nearly double the return you achieve off of that 100 dollars by just investing it ten years earlier. This simple formula proves that it is essential to your future and retirement that you start investing as soon as possible. It is extremely beneficial, you can see for yourself by simply googling, “compound interest calculator”. I recommend the U.S. Securities and Exchange Commission Investor’s Website. Or you can also perform the formula by hand with the formula shown below.