# 20 Second Advisor: This Is CRAZY Math!

You may have heard the terms “Time Value of Money” or “Compounding Interest”. Rather than define them, let me show you a quick example which will make them come alive!

- You begin saving $1,000 / month when you turn 40 years old
- You save the same amount for 30 years
- You earn an average annual return of 8% during this time
- How much money do you have when you turn 70?
__$1,500,000__ - How much did you actually save?
__$360,000__

Think about that…you saved $360,000 over 30 years and you ended up with $1,500,000!

That’s the power of compounding interest. __Are you saving enough each month?__

This is an illustration only. We compounded the investment return monthly. This assumes you have $0 saved at the beginning. We are not and can not guarantee an 8% annual return.

An 8% return is pretty optimistic isn’t it? Some years yes but seems many years less.

Hey John, we are referring to a long term average return. The actual return each year will almost always be higher or lower than this, but, for a typical growth oriented portfolio, this is a reasonable estimate over the long run. Of course, not everyone is invested in a growth oriented portfolio and this is simply an illustration to convey the power of saving over time. Let us know if you have additional questions!