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Start Early, Save Less: The Power of Compounding

Start Early, Save Less: The Power of Compounding

Start Early to Pursue the Benefits of Compounding


Let’s say you want $1 million for retirement by age 65. Assuming a hypothetical investment earning 6% annual returns, how much would you need to save each day to get there? It depends, in large part, on when you start investing. The sooner you begin, the more time your money has to potentially compound and grow in value—and the less you may have to invest (see chart).

 

Start Early, Save Less: Daily Investments Needed to Reach $1 Million at Age 65

What is compounding? The snowball effect that happens each time you make money on not only your original investment, but on past returns too.

Start Early, Save Less: Daily Investments Needed to Reach $1 Million at Age 65

Source: J.P. Morgan Asset Management, Long-Term Capital Market Assumptions. This example is for illustrative purposes only and not indicative of any investment. Account value in this example assumes a 6.0% annual return and does not reflect the impact of fees, taxes or withdrawals.

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