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Time Value of Money at 6% Interest |
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Age start - 22 Age quit - 30 |
Age start - 31 Age quit - 65 |
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Amount invested each year |
$2,000 | $2,000 |
| Total Invested | $18,000 | $70,000 |
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Value of investment at age 65 |
$579,471 | $470,249 |
Look at the chart on the right to see how powerful compounding can be. In the first column, Mary saved $2,000 each year for 9 years starting when she was 22 and stopping when she was 30. The compounding interest increased the $18,000 investment to more than a half million dollars by the time she was 65.
Even though Phil, who started at a much older stage, invests more of his money, the one who starts first has a big head start since that money started earning interest right away and that interest earned more interest. Even though Mary stopped adding more money a long time before Phil, the interest grew over the next 35 years.
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Where is the Best Place to Save Money_ |
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| Where to Save | Advantages |
| Commercial Bank |
Earns interest; money insured against lost |
| Savings Bank | |
| Credit Union | |
| Where Not to Save | Disadvantages |
| "Piggy Bank" |
No interest, No insurance, Can be found and used by others |
| Sock drawer |
