Even if you're decades away from retirement, experts recommend that you start saving, and investing those savings, as early as you can.
That's because the longer your money sits, the more time it has to grow. Compound interest allows any interest earned to then accrue interest on itself, so over time a small amount of money invested earlier will earn more than a large amount of money invested later.
CNBC calculated how much you'd have by age 67 if you put away $1,000 a month starting at various ages.
If you start saving at age 25
With a 4 percent rate of return: $1,309,526
With a 6 percent rate of return: $2,281,511
With an 8 percent rate of return: $4,147,964
If you start saving at age 30
With a 4 percent rate of return: $1,018,026
With a 6 percent rate of return: $1,639,464
With an 8 percent rate of return: $2,734,509
If you start saving at age 40
With a 4 percent rate of return: $583,758
With a 6 percent rate of return: $810,579
With an 8 percent rate of return: $1,148,989
If you start saving at age 50
With a 4 percent rate of return: $292,465
With a 6 percent rate of return: $354,997
With an 8 percent rate of return: $434,675
It's important to keep in mind that these calculations don't account for the many variables that can affect wealth over several decades, including windfalls, emergencies and rises or dips in the market. And, of course, saving hundreds or thousands of dollars a month is an ambitious goal, more than most Americans can manage.
Still, getting into the habit of regularly saving any amount will be great for you in the long run.
Here are a few simple, low-stress ways to start investing:
- Sign up for your employer's 401(k) plan and take full advantage of any company match, which essentially gives you free money
- Contribute to a Roth IRA or traditional IRA, a tax-advantaged individual retirement account
- Consider automated investing services known as robo-advisors that can help you out no matter how much you have in the bank
- Research low-cost index funds, which Warren Buffett recommends
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