, , , , ,

Save Money to Get Free Money

Compound Interest Infographic
Leverage Compound Interest & Invest Early

Invest with Compound Interest

Being paid interest means making money on your money. In other words, interest is free money! Compound interest is interest that is periodically added back into your original investment, which means you earn interest on your interest. Compound interest allows for exponential growth of your money! The average savings account interest rate is .09% APY while the stock market sees an annualized total return of about 10% on average. See the difference compound interest makes with Jade and Rex.

Jade put her money in a savings account with an interest rate of .09%. Rex invested in the stock market with an average annual return of 10%. Even though Jade and Rex saved up the same amount of money ($1,000), 10 years later Rex has two and half times as much as Jade and has made 159 times more money in interest!

It Pays to Save Early

The importance of investing when you are young can not be understated. Consider the story of Olivia and Jason. Olivia started investing at the early age of 25 while Jason didn’t start investing until he was 45 years old. They both found investments that paid 10% in annual compound interest, and they both contributed exactly $80,000 over that time period.

Even though Jason invested the exact same amount of money as Olivia ($80,000), she had almost 4 times as much money by the time they were both 65 years old! Olivia is a millionaire, and Jason isn’t even close!

Maximize Your Money

Saving early and in a competitive market pays off over time! Make sure to do your homework and talk to your financial advisor before making big decisions about your money.