Time Value of Money

The time value of money can be a difficult concept to grasp, so let’s start with a simple question. What would happen if you invested $3,000 per year for 8 years starting when you’re age 22 and earned 6% per year? If your company offers a dollar for dollar 401(K) match this would require saving just $1,500 per year. Would you think that your investment could turn into almost a quarter of a million dollars by age 65? That’s hard to comprehend, isn’t it? Sometimes a picture is worth 1,000 words or, in this picture, a solid start to retirement. Below is a table that illustrates how that can happen.

This table demonstrates the time value of money, particularly in retirement accounts where money can grow tax-deferred until withdrawn. Not only can $24,000 in contributions turn into over $256,000, but also look at what happens when we wait to start saving for retirement. If you wait to start saving until age 32, you would have to invest $3,000 a year, every year, until the age of 62 to have roughly the same amount as the example above.

How Can FinTrust Help You?

Call us today to find out about your options for setting up a tax-deferred account, so you can take advantage of the power time has on your investments in order to comfortably enjoy your retirement.

The information presented is hypothetical in nature and is presented for informational purposes only. Investing in securities involves risk, and there is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. The information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. The material has been prepared for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results. Securities offered through FinTrust Brokerage Services, LLC