Wednesday, November 02, 2005

Turn $1 a day into $67,815

Got a few coins rattling around in your pocket? These can add up to big savings over time.

Want a foolproof way to turn $1 a day into $67,815?

It doesn't take a lot of money or time or personal sacrifice. In fact, it's the simplest and most-proven way to get richer, and if you extend this concept to other parts of your life, you could end up with an enviable retirement nest egg.

To start, all you have to do is take your pocket change at the end of the day and drop it in a jar. If you can do that, and you put away about $1 a day, that's just $7 a week. At the end of the month, you'll have about $30.

Since this is money in your pocket, you've already paid taxes on it in the form of withholding from your paycheck. (If you're self-employed, that's not true, but we'll ignore that to keep things simple.) Every month, deposit your savings in a Roth IRA account, where it can grow tax-free and -- more important -- be withdrawn tax-free in the future.

What's a paltry $30 a month going to do for you? Growing tax-free for 30 years, with a 10% annual return, your investment account will be worth $67,815. (Stocks overall have returned an average of more than 10% a year since 1926, so buying a broad-based stock index fund the Vanguard Total Market Index Fund (VTSMX) is the easiest way to capture that kind of growth.)

Not bad for pocket change, but that's just the beginning.

Here are some other ideas for saving a few bucks here and there that can add up to big dollars over time. If you can knock this $123 out of your monthly budget, at 10% it will grow to $278,040 in 30 years. You've practically financed your retirement with just a few small sacrifices.

If you want to see for yourself how small savings can multiply over time, spend a little time playing with MSN Money's Savings Calculator. You'll see that if you can add in some big-ticket savings, it takes just $443 a month to make yourself a millionaire.

MSN Savings Calculator

This approach can help many mom's and dad's start to save for their children's future college education, or their child's 1st car, if not, other related high ticket expenses.

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