Credit Union Money Saving Tips
The Power of Saving
It's Never Too Late, but Better to Start Young
If you ask the average American, he or she intends to save money - someday. But for many, life just somehow gets in the way. Each paycheck is spent before the next arrives.
Savings rates in the United States are the lowest today since 1933 - during the Great Depression.
While it's certainly tempting to buy a new flat-screen TV or the latest-and-greatest laptop, consider this: Assuming an average annual interest return of 10 percent, a onetime investment of $5,000 at the age of 25 would provide an investor with $226,296 upon reaching the age of 65.
What are the chances of that new TV appreciating at such a pace? Alternatively, an investor at the age of 50 would need to invest $54,173 for a comparable nest egg upon retirement. Not convinced of the importance of starting early? Consider the results of that same $5,000 one-time investment starting just five years earlier at the age of 20 - $364,452! See the importance of getting started?
Still not convinced? Let's see how a dedicated individual who continually invests fairs. At a 10 percent annual rate of return, if you invest $5,000 every year from age 20 to 65, it would provide you with $3,594,524 - enough to provide a very comfortable retirement.
Making things even more beneficial, Roth IRA contribution limits for investors age 49 and below will be raised from $4,000 to $5,000 in 2008 and from $5,000 to $6,000 for those age 50 and above. This investment vehicle can make the interest gained from this portion of your nest egg tax free! Speak with your financial advisor to ensure that you qualify for this type of account.