It’s common sense if you know much at all about investing and personal finance. If you intend to save for your children’s college education, the best thing you can do is start early – as early as possible.
The reason is simple – it’s all about the power of compound interest. When you save money for the future, it earns a return, and if you’re choosing to reinvest those returns, it accelerates.
If you put away $100 at 7% interest, for example, it turns into $107 after a year, but after another year you have $114.49 – you earned $7.49 instead of $7 in that second year. After year three, you have $122.50 – in that third year you earned $8.01 instead of $7.49. It keeps going and going like that, growing year after year – during the eighteenth year, it earns $22.11 on its own, just sitting there.
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