The One Thing You Don't Want To Do

The one thing you don't want to do is this: Learn about compound interest too late.

Using an exaggerated example, let's say you saved $1,000 a year for 40 years (from age 25 to age 65) and kept it in your safe at home. That would give you $40,000. Then, you discover the miracle of compounding and manage to double your money just at the end of that last year with a compounding rate of 100%. That would give you $80,000.

But, what if you started out knowing about compounding and had that 40 years to make it work for you? If you saved the same $1,000 a year, but compounded it each year at 10% (the rough average of the historical market over long, long periods of time), you would end up with $486,851.

Either way you're saving $1,000 a year. The difference is simply understanding how compound interest works.