INVESTING ESSENTIALS
It may feel like time is always referenced in the negative—you’re running late for an appointment or time flies when you’re having fun—but in the investing world, time may pay off in a big way, especially when you have large savings goals in mind.
Thanks to compounding returns, investing early and staying invested for a long time can help you achieve your savings goals for retirement, purchasing a home or even traveling around the world.
> During shaded periods, each investor contributes $7,000 per year. This illustration assumes an 8% annual rate of return and the contribution is made at the beginning of the year.
During shaded periods, each investor contributes $7,000 per year. This illustration assumes an 8% annual rate of return and a contribution made at the beginning of the year.
Each investor’s balance is determined by their contribution and the amount of time their investment grows. The more time they have, the more of an impact their contribution has on the ending balance.
< Each investor’s balance is determined by their contribution and the amount of time their investment grows. The more time they have, the more of an impact their contribution has on the ending balance.
Long-term savings goals are unique for every individual. You may already take advantage of an individual retirement account (IRA) offered through your employer to save for retirement. If you have the account set up with automated investments every paycheck, you’re taking advantage of time and repeated contributions to make the most of your IRA account. Learn more about both traditional and Roth IRAs in this article: Traditional IRA vs. Roth IRA: What’s the difference?
If you have other savings buckets on your wish list, investing in other types of accounts may be an option to help you accomplish those financial goals. Look into Kids’ accounts: Saving for your children if you wish to cover college tuition costs and Investing for short-term goals to help you save for items like travel, weddings, new houses, etc.
The good news is, you have options, and time is on your side for saving for any of your financial buckets. No matter how you choose to invest—or for what reason—be sure to weigh your options carefully and consider any risks that may be involved. If you’d like help with your research, you may want to talk with a financial professional.
This illustration is intended solely to demonstrate the comparative effect of compounding on current versus delayed investments. It does not reflect the actual return on investment, which will fluctuate with market conditions. Regular investing does not guarantee a profit or protect against loss in declining markets.
Past performance is not necessarily indicative of future results.
