The expression “a penny saved is a penny earned” doesn’t cut it these days. But saving a few dollars here and there can add up, particularly if you park the money in a high-interest-bearing savings account or, better yet, a tax-favored vehicle such as a 529 plan or an IRA containing a mix of investments that offer higher returns over the long run.
OK, so 10% annual returns from the stock market may seem far-fetched. But we contend that it’s not unreasonable to expect 7% annualized returns from a conservative blend of bonds and stocks over a period of 15 years. These are the assumptions we used to calculate how the few bucks you squirrel away today can turn into big-time savings later.