Compounding interest: It’s amazing

It’s said that Albert Einstein called compound interest the “eighth wonder of the world.” Compounding happens when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested, and so on. Compounding can have a significant impact on your retirement savings. For best results, save early, save regularly, and save more when you can.

Optimize the impact of compounding by:

  • Starting to save as soon as you can to lengthen your timeline.
  • Making regular contributions through payroll deduction or monthly automatic withdrawals from a checking or savings account.

Contributing even a small amount early on is better than waiting, but look for opportunities to increase your contribution—like when you get a salary increase, eliminate an expense, etc.

Learn more about how compounding can help you build your retirement account.

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