Start Saving Early
Here is a look at how an early start to saving impacts your total return.

In this example, Jane starts saving $2,000 each year at age 21 with a compound interest rate of 8%. After 10 years Jane stops putting money in and just lets her initial investment grow. By age 65 her savings total $462,648 after only putting in $20,000.

John doesn't start saving until 31, but puts in $2,000 each year for the next 35 years at the same compound interest rate of 8%. At age 65 John has saved $372,204—over $90,000 less than Jane—while contributing $50,000 more into the plan.

 

Jane
John  
  Age Contribution Year-End Value Contribution Year-End Value  
  21 2,000 2,160 0 0  
  22 2,000 4,493 0 0  
  23 2,000 7,012 0 0  
  24 2,000 9,733 0 0  
  25 2,000 12,672 0 0  
  26 2,000 15,846 0 0  
  27 2,000 19,273 0 0  
  28 2,000 22,975 0 0  
  29 2,000 26,973 0 0  
  30 2,000 31,291 0 0  
  31 0 33,794 $2,000 2,160  
  32 0 36,498 $2,000 4,493  
  33 0 39,418 $2,000 7,012  
  34 0 42,571 $2,000 9,733  
  35 0 45,977 $2,000 12,672  
  36 0 49,655 $2,000 15,846  
  37 0 53,627 $2,000 19,273  
  38 0 57,917 $2,000 22,975  
  39 0 62,551 $2,000 26,973  
  40 0 67,555 $2,000 31,291  
  41 0 72,959 $2,000 35,954  
  42 0 78,796 $2,000 40,991  
  43 0 85,100 $2,000 46,430  
  44 0 91,908 $2,000 52,304  
  45 0 99,260 $2,000 58,649  
  46 0 107,201 $2,000 65,500  
  47 0 115,777 $2,000 72,900  
  48 0 125,039 $2,000 80,893  
  49 0 135,042 $2,000 89,524  
  50 0 145,846 $2,000 98,846  
  51 0 157,514 $2,000 108,914  
  52 0 170,115 $2,000 119,787  
  53 0 183,724 $2,000 131,530  
  54 0 198,422 $2,000 144,212  
  55 0 214,295 $2,000 157,909  
  56 0 231,439 $2,000 172,702  
  57 0 249,954 $2,000 188,678  
  58 0 269,951 $2,000 205,932  
  59 0 291,547 $2,000 224,932  
  60 0 314,870 $2,000 244,692  
  61 0 340,060 $2,000 266,427  
  62 0 367,265 $2,000 289,901  
  63 0 396,646 $2,000 315,253  
  64 0 428,378 $2,000 342,634  
  65 0 462,648 $2,000 372,204  
  Total $20,000 $462,648 $70,000 $372,204  

This example does not reflect taxes, fees, or inflation. If it did, the numbers would be lower. Systematic investing does not ensure a profit or guarantee against loss. This example is for illustrative purposes and does not reflect the actual performance of investments recommended by Private Capital Management.
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