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Investing
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24 June 2011
The best savings vehicle is a Unit Trust Based Education Fund (UTBEF), says Hubert Feris, a Financia...
19 June 2011
A proposed system of tax credits for medical scheme contributions could make scheme membership more ...
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 Home  Investing Why you should start early
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 TAKE TWO MINUTES TO FIND OUT HOW TO MAKE YOUR FIRST MILLION.
This is not a get-rich-quick pyramid scheme, gimmick or trick. It is just plain old-fashioned common sense making use of compound interest! As Einstein called it: The most powerful force in the universe.
So how does this work? Compound interest is simply the interest that is earned on interest. This means that your money grows at an exponential rate. (see example)
So: R10 000 that you invest today at 9% will grow to R10 900 in a year. In the second year, you earn R981 interest because you earned interest on the interest from the previous year. I know that this is not impressive, but leave the investment for ten years (which is not as long as it sounds, considering that 1994 was ten years ago) and you have grown
R10 000 to
R23 674. Ten more years will leave you with almost SIX TIMES the starting amount.
Not many of us have a cash lumpsum to invest. If you put away R1 000 per month, you will have close to R200 000 in ten years. R1 Million in another fourteen years!
So when you have to plan for your retirement, you can see that the more time you have before that happens, the better. In other words, if you put in less, but START EARLIER, you can still get out more later. If you want to wait until you are in a more comfortable position financially, you will lose time which in this case is money!
For example, you started saving a little at age 25 and your friend, whom is the same age as you, starts at 35, the return on his investment will never be as big as yours, even if he puts in twice as much money as you! Thats why we need to start planning your retirement right now. Call me now. The more time you lose, the more money you lose.
Theres one of two things you will do at this point. You can either make the most expensive mistake of your life OR you could pick up the telephone. The choice is yours.
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