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The answer to this question is always now, no matter what your age and stage in life. One of the keys to a successful retirement is to start saving as early as possible. That’s because time is one of the most powerful tools in your investment toolkit.

Take advantage of the power of compounding

Compounding is where you generate earnings from your investments, and then earn more money as you reinvest those earnings. At first, compounding may seem to have little effect on your wealth. But over time, it has a powerful multiplying effect.

For example, let’s consider two people who start investing at different ages.

  • Jayla starts early and saves $50 every two weeks from the age of 25 until her retirement at age 65.

  • Mateo starts setting aside $100 every two weeks at age 40 and continues until his retirement at age 65. They both earn 4% per year on their money.

As the figure below shows, time clearly matters. Although Mateo invested more overall, he accumulated less than Jayla.

r

The above example is used only to illustrate the effects of compounding and is not intended to reflect future values of any mutual fund or returns on investment in any mutual fund. Account value in this example assumes a 4% annual return. Source: RBC Global Asset Management Inc.

Your monthly savings can really add up

As the chart below shows, it’s best to start saving as early as you can. The earlier you start, the less you need to contribute monthly to reach your retirement goals.

Number of years invested

Monthly contribution amount

$50

$100

$250

$500

5

$3,309

$6,618

$16,545

$33,090

10

$7,335

$14,670

$36,674

$73,348

15

$12,233

$24,466

$61,164

$122,329

20

$18,192

$36,384

$90,960

$181,921

25

$25,442

$50,885

$127,212

$254,424

.table-secondary-custom { background-color: #e2e3e5 !important; }

[Chart note: The above example is used only to illustrate the effects of compounding and is not intended to reflect future values of any mutual fund or returns on investment in any mutual fund. Account value in this example assumes a 4% annual return. Source: RBC Global Asset Management Inc.]

For a real-world example, check out our Investment Performance Snapshot and see the impact monthly contributions and reinvested distributions would have historically had on a portfolio’s growth.

How do you get started?

1.     Set up a pre-authorized savings plan

This is easy to do and makes saving automatic and effortless. You can start with as little as $25 a month. That may not seem like a lot, but you’ll be amazed how small contributions can add up and grow over time.

2.     Give yourself a “retirement raise”

Whenever you get a bump in pay, reward your future self by increasing the amount that you regularly add to your retirement accounts. Over time, the difference can really add up.

It’s never too late to start investing

It’s tempting to postpone saving for retirement for another day – especially if you’re still early in your working years. There always seems to be another competing demand for your money. But whether retirement is in the distant future or around the corner, start saving as early as possible. You’ll build a habit for saving and take advantage of the time you have left to grow your nest egg.

Age is nothing but a number

The fact is we all need to save, whether for retirement or for an emergency fund. The only difference between a 25-year-old and a 55-year-old is that the 55-year-old who is just starting to save for the future has to make up for lost time. If you’ve held off on investing for any reason, the important thing is you’re considering it now.

Start to make up for lost time by:

  • saving larger amounts

  • changing your approach to saving and investing

If you delayed saving and are trying to catch up, you may be able to make up for lost time by saving more now. Someone who has been saving since they started working may have a head start, but saving larger amounts now can certainly help to bridge that gap.

It’s good to start with a budget and to look at other ways to build your savings. For example, a pre-authorized savings plan will allow you to automatically save smaller amounts each month. That’s easier for most people than having to come up with a large lump sum amount to invest. 

A financial advisor can help you develop a plan and put it into action. For some inspiration, check out this table below to see how your monthly savings could grow.

Monthly contribution

d

Assumes a 5% Annualized rate of return. Source: RBC Global Asset Management Inc. The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment in the mutual fund.

Of course, saving large amounts of money isn’t always easy. That’s why it helps to make your monthly contributions automatic. In effect, you pay yourself first – before you think about spending it. Many people find they don’t miss the money because it goes right from their paycheck into their investment account.

Adjusting your approach

Are you an investor who could consider taking on more risk in the hopes of achieving greater growth over time? If yes, changing your investment approach could help you boost your savings.  Work with a professional to ensure any changes are right for you. Everyone has a different tolerance for risk and different personal circumstances.

For example, an advisor could recommend investing your savings in mostly equity-based mutual funds. While these types of funds tend to post stronger gains than other investment options over the long term, they are also likely to expose you to more risk – meaning you may see the value of your investments shift more often as markets move up and down.

Ask yourself:

  • Can I live with this bumpier ride in the markets in the hopes of greater potential returns?

  • Will I lose sleep over my money if markets get choppy?

  • Do I have time to ride out any short-term dips in the market, or will I need my money in the next 3-5 years?

Discussing your short- and long-term savings needs with an advisor can help you get the answers you need.

Take action today

Whether you’re in your 30s, 40s, 50s or beyond, the best time to start investing is now. What step can you take today to get your savings journey? Your financial future awaits.

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Disclosure

Date of publication: Apr 15, 2025

This document is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This document does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This document is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. (RBC GAM Inc.), RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management (UK) Limited (RBC GAM-UK), RBC Global Asset Management (Asia) Limited (RBC GAM-Asia) and RBC Indigo Asset Management Inc. (RBC Indigo), which are separate, but affiliated subsidiaries of RBC.

In Canada, this document is provided by RBC GAM Inc. (including PH&N Institutional) and/or RBC Indigo, each of which is regulated by each provincial and territorial securities commission with which it is registered. In the United States, this document is provided by RBC GAM-US , a federally registered investment adviser. In Europe this document is provided by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority. In Asia, this document is provided by RBC GAM-Asia, which is registered with the Securities and Futures Commission (SFC) in Hong Kong.

Additional information about RBC GAM may be found at www.rbcgam.com.

This document has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this document has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

RBC GAM reserves the right at any time and without notice to change, amend or cease publication of this information.

Past performance is not indicative of future results. With all investments there is a risk of loss of all or a portion of the amount invested. Where return estimates are shown, these are provided for illustrative purposes only and should not be construed as a prediction of returns; actual returns may be higher or lower than those shown and may vary substantially, especially over shorter time periods. It is not possible to invest directly in an index.

Some of the statements contained in this document may be considered forward-looking statements which provide current expectations or forecasts of future results or events. Forward-looking statements are not guarantees of future performance or events and involve risks and uncertainties. Do not place undue reliance on these statements because actual results or events may differ materially from those described in such forward-looking statements as a result of various factors. Before making any investment decisions, we encourage you to consider all relevant factors carefully.

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© RBC Global Asset Management Inc., 2025

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