Interest is One of the Best Ways to Protect Your Credit

 

Planning for retirement at a young age is a great way for couples to protect their credit and grow their nest egg for the future. Establishing a regular pattern of savings by setting aside a small amount from each pay check is worth the effort. The need has never been greater than it is today to adequately prepare for your future years. Failure to prepare can result in damaged credit and extensive amounts of debt. Saving now provides the assets that offer him the best chance to reach his goals. Two of the biggest assets that an individual possesses to accumulate retirement savings are time and compound interest.

Compound interest is the cumulative effect that an interest rate has on a principle amount over a given number of years. By waiting a long enough period of time, even a small amount of money can grow into a significant amount. Consider this: Amy, a 22-year-old college graduate, saves $300 per month into an account earning 10% per year for six years. (That's the average annual return of the stock market over time.) Then at age 28, she starts a family and decides to stay home with the children full time. By then, Amy had kicked in $21,600 of her own money. But even if she doesn't contribute another cent ever, her money would grow to a million bucks by the time she turned 65. That shows the power of compound interest and the importance of starting early. And keep in mind that this total would continually be added onto as the years go on.

No one wants to reach the age of retirement and face the fact that they do not have enough money to live comfortably or face the possibility of living off of credit and amassing large debts. Start your savings plan early and unleashing the power of compound interest your financial future is bright indeed.

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