You have probably heard many times that it’s very important you begin to save money as early as possible, but maybe you’ve never actually been explained why. The beauty about opening a retirement savings account lies in the compound interest. Since retirement accounts are actively invested, your savings have the potential to grow significantly over time.
As Business Insider’s Sam Ro explains, “Compound interest occurs when the interest that accrues to an amount of money in turn accrues interest itself.” Individual who begins saving small amounts early in their life will likely have an account with more money than people who saved large amounts of money later in their careers.
Check out the full story here that will show you a few examples on the power of compounding interest.
If you don’t have a retirement account or feel like you’re paying too much in fees, please contact us so that one of our financial advisors can help you come up with a better plan.