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How
Long Will It Take for Your Savings to Double?
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How
long it will take for your money to double is easy to
calculate using the Rule of 72. Simply divide 72 by
the percentage of interest you earn on your savings.
If you're not pleased with the answer, start investigating
other options that pay a higher rate of return.
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Reach
Your Goals with an IRA
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Contributing
every year to an IRA can be a great way to save for
retirement. With more people eligible for more benefits
than ever, a Roth or traditional IRA may bring you closer
to your retirement dreams. Plus, you may even be eligible
for a tax deduction! Use this calculator to witness
the power of contributing to an IRA.
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What
a Difference a Percentage Makes
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When
you earn interest, your account balance continues to
grow. In time, you actually earn interest on your interest!
Even one percentage point can make a huge difference
in the long run. Look at this chart to see what happens
to a $1,000 investment over 40 years...
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How
Does That Work?
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If
you think putting off saving for your retirement for
a few years won't make much of a difference, take another
look. By starting early and giving your money the opportunity
to grow over time in a tax-deferred account, you'll
put yourself at a huge advantage in securing the kind
of future you deserve.
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Don't
Make This Mistake!
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The
biggest mistake you can make is assuming you don't have
any money to save. If you earn an income, it's simply
a matter of how you're spending it. You can put some
money aside each month - if you make saving for your
future a priority. The longer you wait the more money
you will need to save each month to make up for lost
time.
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Time
Is Money
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If
you begin saving for your retirement early in your life,
you'll have to put aside much less money each month.
If you wait until you're nearing retirement, the amount
you'll need to save each month could be near impossible.
The illustration at right shows you how time really
is money.
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You
Pay Half But Only Get a Quarter
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Look
at the chart on the right. It shows that a homeowner
can make monthly payments on a mortgage for 15 years–
half the term of the loan – but will not have paid half
the principal. In fact, in today's rate environment,
less than 25 percent of the principal has been paid.
The bulk of the mortgage payments have gone to interest.
The homeowner will not have paid half the principal
until year 23. In essence, he pays half, but only gets
a quarter.
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Beat
the Rule Through Biweekly Payments
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You
can beat the rule through mortgage acceleration. Look
at the chart on the right. It shows how a homeowner
beat "The Rule of 50/25" through biweekly mortgage payments,
achieving total home ownership for thousands of dollars
less. It's an amazing difference. Plus, the homeowner
secured a greater quality of life for the family by
escaping the burden of a mortgage in 22 years – eight
years early.
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Examples
are hypothetical and for illustrative purposes only,
assuming annual contributions on January 1 of each year.
Hypothetical rates of return are nominal rates compounded
monthly with a steady rate of return and no penalties.
Higher rates of return have historically been associated
with higher risk. Tax-deferred accumulations are shown
prior to federal taxes. Figures do not represent any
actual investment performance, price or yield. Some
investments are subject to loss in market fluctuations
and are also subject to possible loss of principal.
A continuous or periodic investment plan does not assure
a profit and does not protect against loss in declining
markets.
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