Taking advantage of double interest
Most people when they first start working will aim for goals such as buying a house, buying a car, traveling more than saving for retirement.
However, prioritizing savings as soon as possible is an important stepping stone for the future when retiring. Even when you have large savings, you can retire early.
According to a survey by MoneyRates, people who start saving at the age of 20 will have less financial burden when retiring before the age of 60.
A MoneyRates survey gives an example, if you invest $250 a month in a retirement account, with an average annual profit of 8%. The amount of money you will accumulate when you retire at the age of 65 will be extremely surprising.
If you start investing at the age of 25, you will accumulate 878,570 USD. If you start investing at the age of 35, you will accumulate 375,073 USD. If you start investing at the age of 45, you will accumulate 148,236 USD.
To see, saving early will help you make the most of the benefits of double interest rates. Dual interest rate is a form of savings deposit in which the interest received after each period will be added to the principal to continue to make a profit for the next period.
This creates the effect of "mother's interest, child interest", helping savings increase faster over time compared to single interest (calculated only on the principal). Double interest rates are the best effective for long-term savings.
Protecting risks in the face of the market
The financial market is always cyclical: there will be years of very strong growth and also years of decline.
If you start saving early, you can create a "buffer zone" against some financial fluctuations. Your finances will be able to handle deep losses because you have a lot of time to overcome any short-term losses.
If you start saving from the age of 25, the market crashes in the year you are 30 years old, your account may be depreciated. However, you have another 35 years (until age 65) for that investment to recover and continue to grow.
On the contrary, if you start saving from the age of 55, and the market declines in the year you are 60 years old, you only have a little time left to wait for the market to recover. You may be forced to withdraw money when your account is at a loss.
Therefore, saving early will give you a " time cap" to overcome temporary market declines without having to worry too much or be heavily affected.
Training financial discipline
When you are young, you work hard to achieve financial stability for basic plans such as buying a house, starting a family.
While these goals may be prioritized, you should consider including saving your pension in your important financial plan.
The important thing is not the amount of money you save, but simply the act of saving.
If you make this a regular habit, you will create motivation and quickly build your own financial fund very early.
Regular savings will become as natural and familiar as the way you pay monthly credit card bills.
Saving also creates discipline for you when managing your finances, which always creates safety for you in a life full of ups and downs.
