Part 5/10:
- Investment for Growth: Instead of letting this money sit idle, it is invested into products like index funds, tax-advantaged accounts (e.g., 401(k)s, IRAs), or ISAs, which harness compound interest. Over decades, compound growth can turn modest savings into significant wealth, as exemplified by comparing Sarah and James.
The Power of Compounding
The contrast between Sarah, who invests early, and James, who starts later, illustrates why starting early is vital. Even with smaller contributions, Sarah's money compounds over time, resulting in greater wealth at retirement. The lesson is clear: giving your investments more time to grow exponentially makes a huge difference.