Exponential Growth

I think a very important lesson for people to learn as early as possible is the idea of exponential growth. Consider an initial investment in a bank of $100. Assume you have a 10% annual interest rate (the interest rate is quite high for a savings account, but it will show the idea better). Now the growth of your initial investment is given by P*(1+r)^(t) where P is the principal or initial amount, r is the interest rate, and t is the length of time in years. Okay, enough math. Now here are the results:

Over the first 20 years the investment grew to $672.75 and over the next 10 years it grew to $1744.9, which is approximately 3 times the value at 20 years. Consequently, when you are trying to save money for retirement, the single greatest epiphany you can have is that you should use time to your advantage. The more you can save at an earlier time the much better you will be when you want to "cash out".