Basic Investment Concepts

The Power of Compound Interest

The following table shows why compound interest is such a great thing. Saving $50 a month earning a 6% rate of return, can give you a nest egg of $23,200 in twenty years. And in thirty years it can give you $50,500. Not bad for $50 a month.

The Beauty of Compound Interest*

Monthly Savings

In 15 Years**

In 20 Years**

In 30 Years**

In 35 Years**

$10 ($120/yr.)

$2,900

$4,600

$10,000

$14,200

$50 ($600/yr.)

$14,500

$23,100

$50,200

$71,200

$100 ($1,200/yr.)

$29,100

$46,200

$100,500

$142,500

* Calculations made from a standard Time Value of Money table.

** Assumes a 6% rate of return.

Still think you're too young to start saving for retirement? If you are 35 years old and save just $2,000 per year from now until age 65, at a 6% rate of return, you'll have almost $167,400. But, if you wait until you are 55 to start saving, you will have to save approximately $15,600 per year at 6% to give you $213,000 at age 65. It's better to start smaller and earlier, and keep it up.

Share Article:
Add to GooglePlus
NOTICE: Trust products and services: i) are not deposits or other obligations of, nor are they guaranteed by, First United Bank & Trust or its affiliates; ii) are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other agency of the United States or by First United Bank & Trust or its affiliates; and iii) are subject to investment risks, including the possible loss of value.

NOTICE

First United offices will be closed, Saturday, August 20; to celebrate our employees with a company-wide event.

You may still access First United through our ATM Network, or using Online or Mobile banking.

×