Race to 100k

ONCE UPON A TIME, a hare contributed $578/mo to his MSRP account. After 10 years, no more contributionsā€”itā€™s goof off time. Heā€™s a sprinter not a distance runner after all.

At the same time, a slow and steady tortoise entered the race with a $200/mo contribution. Heā€™s going the distance, so he just keeps on contributing all the way to retirement.

The moral of this story: At the 100k milestone, compounding can potentially begin to outpace contributions. Compounding did most of the work for the hare helping him finish ahead.

account continues to trend up while the contribution line remains flat. A tortoise contributes a consistent amount over the entire 30 year period, but the angle of his growth line is much flatter than the rabbit. After 30 years the rabbit's account is valued at $404,048 with his total contributions at $69,360. The tortoise has $243,994 but has contributed a total of $72,000.

This illustration is a hypothetical compounding calculation. It is not intended to serve as a projection or prediction of the investment results of any specific investment. Investments are not guaranteed. Depending on your underlying investments, your return may be higher or lower. No taxes or fees are reflected in this example, which would lower the results displayed. Investing involves market risk, including possible loss of principal.

Source: Compound interest calculator at investor.gov assumes 7% return compounded monthly.

Compounding takes time. Give your money time to grow.

Learn more in the video below.