Many of us have learned about the time value of money, that is, the idea that a dollar today is worth more than the same sum in the future, due to its possible earning capacity.
Those who set aside savings earlier in life end up further ahead, since they can take full advantage of the power of compounding. Compounding your investment means you gain reinvest annually's gains, and achieve gains on these gains year in, year out. I apologize, but this video was not edited to load.
Tap here to see other videos from our team. With a TFSA, the Explorer browser can be refreshing or Who wants to become a millionaire with its TFSA? In this topsy-turvy world of negative central bank interest rates and consumers who seem increasingly comfortable with high and growing debt levels, it seems timely to revisit one of the major benefits of saving, especially when doing so early and often.
Let us assume, say, an individual who invested $6,000 per year, $500 for 10 years, beginning at 18 and ending when they turn 28. Let s say individual never saves again, but lets the investment compound until retirement at age 65 total saved: $60,000 I purposely picked $6,000 per year because that is the current annual contribution limit to a tax-free savings account TFSA TFSAs are available to all Canadian residents aged 18 and over. Also, consider funding this great tool for student. Start your university career now with a little interest.