Compound Interest
Definition:
Interest computed on the sum of the principle and the accrued interest
Don’t ignore the value of investing early. The power of compoundinterest, coupled with regular contributions and tax-shelteredtreatment, means that an early start to investing will put apowerful ally–time–squarely on your side.
For example, let’s say, starting at age 35, you invested $3,000each year with a 14 percent annual return. You’d have an annualretirement income of nearly $60,000 at age 65. But $5,000 investedat the same rate of return beginning at age 45 only results in$30,700 in annual retirement income.