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Author: njbagelusa One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2818  
Subject: Who wants to be a millionaire? Date: 2/25/2000 3:04 PM
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Becoming a millionaire is now an American dream, and achieving this dream is much easier than you may think. All you need is time, dedication, lots of patience and not too much luck. The following example really demonstrates the power of savings when you have time on your side. It's also great motivation to get you thinking about retirement and savings.

Let us assume the following:
1. You are 18 years of age
2. You will retire at age 62 (Gotta enjoy your retirement - right?)
3. The average rate of return during this time will be 10%
4. You will be making the maximum contribution into a ROTH IRA until age 25 (8 total contributions).

Yearly investments of $2,000 into a Roth IRA will produce the following results:

Age Years till Avg Return Investment Estimated Future
Retirement Value

18 44 10% 2,000 197,352
19 43 10% 2,000 177,794
20 42 10% 2,000 160,175
21 41 10% 2,000 144,302
22 40 10% 2,000 130,002
23 39 10% 2,000 117,119
24 38 10% 2,000 105,512
25 37 10% 2,000 95,056
------ -------
Total 16,000 1,127,312

As demonstrated, simple $2,000 yearly investments for 8 years can turn a poor 18 year-old into a 62 year-old millionaire. This example clearly illustrates the power of time on the growth rate of money. It is important, however, to consider this information in relation to inflation and other retirement investments (401K, Social Security, Pension and additional Roth investments after the age of 25).

In any case, I hope that this little example will help encourage everyone to consider the importance of investing. It sure helps me to be enthusiastic about savings and to keep things in perspective.

njbagelusa@netscape.net
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