Everyone wants to save money but when push comes to shove, it can be much harder than you think. No matter what goal you have for saving, it’s always best to start as early as you can and let compounding work in your favor.
Steven Trujillo joins the set from Northwestern Mutual to discuss exactly what compounding is, how it works, and why it is so beneficial. Compounding returns is when your money is working for you by earning more on the original amount of capital over time.
So not only is your initial investment earning money but so are the additional returns that you’ve earned in the account.
For example, if a 25-year-old would like to save $1 million by age 65, at an assumed 7% compounded annually this person would have to save $381 per month. Over the next 40-years, this person’s individual contributions were approximately $182,880. A majority of the $1 million would come from growth, a total of $817,120.
For additional help on how to reach your savings goals, visit Northwestern Mutual advisor Steven Trujillo’s website or call Northwestern Mutual at 505-880-9600.