Last week we showed you how a seemingly-low interest rate on a loan can add up over time – or how you can end up paying $430,000 for a $200,000 house.

This week we’re covering a happier topic: how the same principle can help you build serious wealth for the long haul.

You already know it’s important to save for retirement. But if you are going to do it right, you need to remember two key points:

• Start saving as soon as you can: compound interest can make anyone rich, given enough time.
• Investment fees are not your friend: Even small ones will cost you big bucks down the line.

Let’s assume you plan to retire at age 65. If you start your retirement fund when you’re 25, your contributions have a full 40 years to grow. If you put $100 into your account every week, with a modest 6% return you’ll end up with about $867,000. Not bad, considering you’ll only have actually deposited $208,000.

But if you start at age 35, it’s very hard to catch up. Even if you deposit the same amount of money (by increasing your weekly contribution to $133) you’ll end up with only $583,260. Think about that: In both scenarios you put away the same amount of money, but delaying 10 years will cost you $300,000.

Now that you know when to start investing, how about where?

If you’re like most investors, you’ll end up with a managed fund, probably a mix of stocks and bonds. The most important criterion for choosing a fund is not its past performance. If you want to maximize your long-term returns (and who doesn’t?), pick a fund with low fees. Otherwise, your returns are going to pay for a money manager’s house in the Hamptons, instead of your own retirement.

For example, Vanguard is one of the biggest investment groups in the world, with over $1 trillion in managed assets. They also offer some of the lowest fees around. According to their website, Vanguard charges an average fee of 0.2%, compared to an industry average of 1.2%.

Now 1% may not seem like much, but remember, little differences add up over time. If you have $100,000 in your retirement account, that 1% is a thousand dollars – every year. In the example above, saving $100/week for 40 years will give you $867,000 (assuming a 6% return). But if you were paying 1.2% fees the whole time, your effective rate would only be 4.8%. Because of the magnifying effect of compound interest, that little fee would cost you a whopping $230,000.

Remember, no matter how old you are, the best time to save for retirement is right now. Check out Bankrate.com’s handy calculators to see how your money can work for you.