The Power of Compound Growth

You've heard this advice: Start saving early for your retirement. Consider this example. Investor B opens an IRA at age 19. For seven consecutive years he puts $2,000 in his IRA at an average growth rate of 10% (7% interest plus growth). After seven years this investor makes NO MORE contributions -- he's finished.

A second investor A makes no contributions until age 26 (this is the age when investor B was finished with his contributions). Then A continues faithfully to contribute $2,000 every year until he's 65 (at the same theoretical 10% rate).

Whos is better off? Check the chart below.