I explained to him that if he didn’t pull the money out of this account and if he never added another penny to this account, forty-nine years from now when he reaches retirement age of 67-years old, that $500 one time investment would be worth approximately $53,000.
Time Value of Money: Money today is worth more in the future because of its earning capacity in the form of compounding interest and/or appreciation in value.
For example: $500 initial investment with a 10 percent annual return on investment will be worth $550 in one year.
If you reinvest $550 with a 10 percent annual return on investment, it will be worth $605 in the next year.
The sooner you start to invest money and allow it to compound, the more time you’ll allow your investments to continue to “Double Up” – 3 or 4 times.