Bear with me for just one more example: Let's say that you are retired and can still afford to save a little. So, how about putting $2,000 per year into a ROTH account for twenty years, compounding at 8 percent? The result: $91,523.93. Wow!
That's the power of compounding! With compounded interest on the money you save and on the interest that money earns, over time, even a small amount saved can add up to big money. If you are willing to watch what you spend and look for little ways to save on a regular basis, you can make money grow. You just did it with one cup of coffee.
Rates of return are for illustrative purposes only, and do not represent the returns of any particular investment. Past performance is not a guarantee of future returns.