eveee99
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Reproduced from Wealthy Retirement:
Here's a mind-blowing example from a study conducted by Richard Russell of the Dow Theory Letters on the power of compounding:
An 18-year-old girl puts $2,000 into an account each year from the ages of 19-25, then stops contributing and lets it compound at a rate of 10% until age 65. That means she has contributed only $14,000 in total. But because of compounding, by age 65, she's almost a millionaire, with $944,641 in her account.
Now, let's say this girl has a twin brother. He's not as disciplined and continues to blow his money on useless things. Finally, at age 26, he realizes he needs to start saving, too.
He puts $2,000 per year into his account starting at age 26. He also lets his money compound at a rate of 10% until age 65. Except he contributes $2,000 every single year from ages 26-65. That means he's contributed $80,000 in total... more than five times what his sister has contributed.
By age 65, he's almost a millionaire, too, with $973,074 in his account.
Who's the winner?
The sister contributed only $14,000 ($2,000 per year over seven years) and ended up with $944,641. That's a net gain of $930,641, or 66 times her original investment.
The brother contributed $80,000 ($2,000 per year over 40 years) and ended up with $973,074. That's a net gain of $893,074, or 11 times his original investment.
The sister was able to accomplish much better results with much less money... all because she realized the power of compounding money over long periods of time.
If you missed this, go back and read the example again until you realize what happened.
Not only is compounding an incredible wealth builder, but it's also simple to do. First, you need an investment that generates a return every year for many years in a row. Then, you need time and perseverance to let the dividends grow.
Compounding doesn't require vigilance, activity, or effort to make it work. In fact, it works best when you forget about it altogether.
This is why compounding is by far the best investment strategy for your children or grandchildren. They have time to let the dividends accumulate, and they won't think about their accounts every day.
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My question is:
Is there any investment scheme currently offered by bank or insurance company that has a high enough return (maybe 5%) to allow compounding to work in this way? Pls share if you do know. Thanks!!!
Here's a mind-blowing example from a study conducted by Richard Russell of the Dow Theory Letters on the power of compounding:
An 18-year-old girl puts $2,000 into an account each year from the ages of 19-25, then stops contributing and lets it compound at a rate of 10% until age 65. That means she has contributed only $14,000 in total. But because of compounding, by age 65, she's almost a millionaire, with $944,641 in her account.
Now, let's say this girl has a twin brother. He's not as disciplined and continues to blow his money on useless things. Finally, at age 26, he realizes he needs to start saving, too.
He puts $2,000 per year into his account starting at age 26. He also lets his money compound at a rate of 10% until age 65. Except he contributes $2,000 every single year from ages 26-65. That means he's contributed $80,000 in total... more than five times what his sister has contributed.
By age 65, he's almost a millionaire, too, with $973,074 in his account.
Who's the winner?
The sister contributed only $14,000 ($2,000 per year over seven years) and ended up with $944,641. That's a net gain of $930,641, or 66 times her original investment.
The brother contributed $80,000 ($2,000 per year over 40 years) and ended up with $973,074. That's a net gain of $893,074, or 11 times his original investment.
The sister was able to accomplish much better results with much less money... all because she realized the power of compounding money over long periods of time.
If you missed this, go back and read the example again until you realize what happened.
Not only is compounding an incredible wealth builder, but it's also simple to do. First, you need an investment that generates a return every year for many years in a row. Then, you need time and perseverance to let the dividends grow.
Compounding doesn't require vigilance, activity, or effort to make it work. In fact, it works best when you forget about it altogether.
This is why compounding is by far the best investment strategy for your children or grandchildren. They have time to let the dividends accumulate, and they won't think about their accounts every day.
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My question is:
Is there any investment scheme currently offered by bank or insurance company that has a high enough return (maybe 5%) to allow compounding to work in this way? Pls share if you do know. Thanks!!!
it is our CPF
one of lowest risk with compounding effect.
