ONCE UPON A TIME, a hare contributed $578/mo to his MSRP account. After 10 years, no more contributions—it’s goof off time. He’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. He’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.
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.