Knowledge

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Focus on tomorrow, act today

For savers and investors, there's one foundation for building wealth you may find useful: compound interest. Compounding applies not only to interest but also to investment gains. The earlier you invest, the greater the potential impact compounding can have on your total gains. Check out the power of compounding with the tool below, which assumes you'll invest $6,000 annually up to age 49, then $7,000 annually starting at age 50.

I'm 35 years old and I plan to retire at age 65

Current Age
Retirement Age
Rate of Return

Total value at retirement is $488,290*

Select an annual rate of return. This rate will be used to estimate the future balance of an IRA. Actual rates of return cannot be predicted and will vary over time.
*Value based on $6,000 annual contribution to age 49, and $7,000 annually thereafter.2

You can see why it's so important to contribute early and often to a tax-friendly 401(k) or Individual Retirement Account (IRA), or both. An IRA is a tax-advantaged retirement account that you open and manage yourself. A 401(k) is offered through an employer.

 

 
Now that you understand the power of compound interest, let's take a look at ways you could choose to apply it.

Get up to $3,000 (plus $0 commissions as always) Learn how1

Take charge of your finances with a new E*TRADE brokerage or retirement account by November 30
and start with a generous cash bonus.

Use code: BONUS21

Looking to expand your financial knowledge?