Don't underestimate the value of time. The longer you keep your money invested, the more time it has to multiply and potentially grow.
Let's say you put $1,200 a year (that's just $100 a month) into a tax-deferred account, such as a 529 college savings account* for a total investment of $21,600 over 18 years. If this investment returns 5% per year, you will have approximately €35,400 after 18 years.
But if you wait nine years before you start saving, you'll have accumulated about $13,900, assuming the same 5% return.
In other words, you've only made about $3,000 in the last nine years – as opposed to almost $14,000 in 18 years!
That's the beauty of compounding: making money on your investment and then monetizing that income. And with time it can only become more powerful.
If you start saving earlier, you may have saved more
These hypothetical examples do not represent the results of any particular investment. The assumed 5% return is for illustrative purposes only. Actual market returns will fluctuate annually and are not guaranteed. The final balance does not take into account any taxes or penalties that may be due upon distribution.
Read the diagram description
Starting to save earlier can mean that you have saved more
This chart shows that a $100 monthly contribution will yield more if you start saving earlier, giving the money more time to grow. If you save $100 a month for 18 years, your ending balance could be $35,400. If you save $100 a month for nine years, your ending balance could be about $13,900.
