Another great article for your reading pleasure, this one was in USA Today. This is most likely the greatest obstacle for people to overcome when it comes to saving for retirement. We now live in a world of instant gratification and it is hard to make sacrifices now for gains in the future.
Albert Einstein says compounding interest is “the greatest mathematical discovery of all time”. The author highlights the importance of this in the article. Most middle Americans do not realize how powerful this force is, and how it can be their greatest asset for accumulating wealth.
The author uses a great example to illustrate the point.
“For example, do you earn more in a job paying $1,000 a day for 35 days or a job paying one cent the first day and doubling that every day for 35 days?
The math shows that after 25 days a penny a day out-earns $1,000 a day by more than $140,000. No legitimate interest is 100%, as is the case here, but the exaggeration proves the point.”
It all boils down to how much you save, how long you save, and at what rate your money grows.