Power of Saving

There are tons of reason for not to save money, but the most common one is that people can't see the benefit from Saving. If you put $100 into your investing account, with 10% interest, it will only grow $10, which is hardly enough for a pizza. Why bother to save?? What people fail to see here is that Time is the major factor when comes to saving.
With the same $100 and 10% interest rate. I put the $100 into my investment account for 40 years.............(100 x 110%^40)= 4526 which is 45 times of my original deposit. Now imagine what if you put $1000 in , or $10000, or even more.

TIPs #1. Tme is the main factor when it comes to investing.

Now let's look at another example. Bob and Alex are friends. Bob starts investing at age 22. He put $2000 in to his investment every year until he is 28. After those 7 years Bob didn't save a single penny. Alex on the other hand starts saving at age 29. He also put $2000 in to his investment every year until age 61. Bob's total investment is 14,000; Alex's total investment is 66,000. They both have the same 10% interest rate.

Who end up having more at age 62?

The answer is Bob. Bob end up having 628,330. Alex on the other hand only have 600,080Even though Bob only save $2000 for 7 year, but he allows his investment to grow for 32 years. On the other hand even though Alex spends $2000 for 32 years, but he doesn't have enough time for it to grow. That’s why Bob end up having more. That’s why $14,000 is more than $66,000 if you save at the right time.

TIPs #2. Save less early is better than save more later.