When you save and invest money, it goes to work for you. That’s because money grows over time when it earns interest. Here are three facts to know.
1. The more time you have to save, the more money you’ll have.
2. The more money you save, the more money you’ll have.
3. The higher the rate of interest your money earns, the more money you’ll have.
Here’s an example of putting your money to work: Let’s say you buy a slice of pizza and a soda every day for $3. If you skip the pizza and soda and save $3, you could end up with an extra $90 a month ($3 x 30 days), which would turn into an amazing $1,080 every year! ($90 x 12 months = $1,080)
Imagine if you put that $90 each month into a savings account at a bank, or invested it in a mutual fund. The chart below shows how much money you could end up with (a lot!).
The first row shows your money earning 3 percent in a savings account. The second row shows your money earning 9 percent in an investment such as a mutual fund. (Taxes are not factored into these calculations.)
$90/month
2 years
5 years
10 years
15 years
20 years
3% return
$2,223
$5,818
$12,577
$20,428
$29,547
9% return
$2,357
$6,788
$17,416
$34,057
$60,110
Quick Quiz:
1. How much money would you have in 10 years if you earned 3 percent?
2. How much would you have in 20 years if you earned 9 percent?
Answers: 1. $12,577; 2. $60,110
P.S. If you’re not ready to give up your pizza and soda every day, how about every other day? You won’t save as much, but what a great start! Click here for more ideas on where to find a few bucks to save.
