1. Time is your first and greatest asset. The earlier you start saving, the more money you will collect. The compounded interests will grow your money at an increasing rate. For example, if you start saving $100 each month at age 40, at an interest rate of 8% you will have $7,895 at age 65. If you start saving the same amount each month at age 20, at the same interest rate you will have $41,743 at your retirement at 65. You will reap the greatest benefit out of your savings when you start earlier.
2. Invest while the inflation rate increases. Inflation decreases the purchasing power of your money fast, so keeping your money under your mattress won’t do you any good. Understanding nominal interest rate versus real interest rate is the key to this. Nominal interest rate is what is stated in your savings account at the end of the month. Real interest rate considers inflation. One percent of nominal savings is equal to 2% of real interest rate. A 2% inflation rate today simply means the things you buy today are 2% more expensive than they were last year.