Planning Your Retirement - It's Best to Start Early
When considering investments, time can be a powerful ally. As with most things, the earlier you begin, the more beneficial it will be. You should begin investing in an IRA as soon as
possible, because the longer your money has to grow, the better your chances of seeing a large return. Consider this
example: Jane began investing in her IRA at age 21 and stopped
at age 30, but left her money in her account. Mary waited until she reached age
35 to invest but continued funding her account until she reached age 65. As the
chart shows, even though Jane contributed much less, her account was worth more
at retirement because it had a longer time to grow.
This is a hypothetical example and is not intended to represent the
results of an actual investment. These are gross figures and do not show
after-tax returns. This assumes that contributions have been made at the
beginning of the time period measured. Based on an interest rate of 10%
compounded month; effective rate of 10.47%
There is no assurance that contributing less money over a short time
period will result in receiving more money than one who invests more
money over a large period of time.
Investors in 401ks, IRAs and other retirement plans should be
particularly diligent about making early contributions in as large an
amount as possible.
