3284 Don't wait to start saving

It will cost you a lot of money.

"David is 25 years old.
He begins saving $2,000 a year for ten years (until age 34) then stops. A total of $20,000 has been invested.

Katie, age 22, plans to wait until age 35 to start saving and will invest $2,000 a year until age 65 at a total investment of $62,000.

Who would you expect would have more money at 65?

If you guessed David, you were RIGHT!

David’s initial investment of $20,000 in stocks (at an average interest of 10%) would be worth $545,344 at age 65.

Katie’s initial investment of $62,000 ($2,000 X 31 years) in those same stocks would be worth $352,427 at age 65."

And if David hadn't stopped, but kept going until he was 65? He'd have $815,771. think of it. Just $2,000 a year. That's just a little more than a pack of cigarettes a day not bought and smoked.

Project Cash How time affects the value of money