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How to Build a Big Nest Egg With Little Effort

4 Minute ReadTopic: retirement

Did you ever pretend to be a superhero as a kid?

Most kids do.

And every kid knows you can’t be a superhero without a superpower. Whether you had laser vision, lightning speed, or the ability to leap tall buildings in a single bound, one thing’s for sure: You conquered the world a little bit every day.

Now that you’re officially a grown-up, you probably think your superpower days are over. Well, we’re here to prove you wrong.

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There’s one superpower that can turn your hard-earned cash into an easy million. Yet many Americans don’t take full advantage of it. What is it?

Compound Interest

Let’s Look at This Power in Action

Jen and Amber are best friends. They both know the importance of saving for retirement, but they take two different paths to get there.

  • Jen gets a jump on her retirement fund as soon as she becomes eligible to open a 401(k) account at her first job. She starts throwing $3,000 a year toward retirement at age 24. On her 35th birthday, she decides she’s saved enough and doesn’t put another penny toward retirement from then on. She has invested $33,000 of her own cash over the course of 11 years.
  • Amber waits until she’s more established to start building her nest egg. By the time she’s 35, she has bought her first home and finally feels ready to focus on the future. She stockpiles $3,000 a year in her 401(k) and keeps that pace up until she turns 65. Thirty-one years of investing brings Amber’s out-of-pocket total to $93,000.

After the retirement party dust settles, Jen and Amber stack their nest eggs up against each other. Who do you think comes out on top? The results may surprise you.

Crazy as it may seem, Amber shelled out three times more money than Jen yet retired with only half the retirement fund. How did Jen end up with nearly $1.2 million, while Amber barely broke $600,000?

It all comes down to the power of compound interest.

Both Jen and Amber invested in growth stock mutual funds that earned the market average. But Jen gave her money more time to grow—and that made all the difference. With compound interest, time really does equal money!

Worried It’s Too Late? There’s One More Power at Play . . .

This example is clear proof that opportunity doesn’t wait. Every day you put retirement off, you lose the chance to earn free money.

But all’s not lost if you’re out of your 20s and still haven’t started investing. That’s because compound interest isn’t the only superpower at work. You have control of an even more important force in your future: how much you put in. 

Can it really make a difference? Let’s say you’re 40 years old with no retirement savings. You can still retire a millionaire. You’ll just have to contribute more cash to get there. In this case, that would mean about $600–800 a month, depending on your rate of return.

Seize the Day

Spiderman learned an important lesson on his journey to superhero-dom: “With great power comes great responsibility.”

Compound interest gives you the power to multiply your money without a lot of effort. But you can’t just sit back and wait for it to work its magic. It’s up to you to make it happen. The sooner you start saving, the quicker you’ll reach your goal—with less money out of your pocket.

If you’re not sure what it will take to hit your retirement target, ask an investing pro you trust to show you your options. A true pro can help you plan for a brighter future , no matter your starting point.

So what are you waiting for? Kick-start your future today!

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