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Everyone knows the importance of building wealth. Unfortunately, not many recognize the urgency of starting early.
Below is a hypothetical example to illustrate what the difference would be if one were to start investing earlier as compared to if they were to start investing later:
Able to start saving
|
Retirement Age
|
Annual amount require to save |
Expected Returns per annum |
Value at Retirement* |
| 25 |
62 |
2400 |
5% |
$243,908 |
| 26 |
62 |
2400 |
5% |
$230,007 |
| 27 |
62 |
2400 |
5% |
$216,769 |
| 28 |
62 |
2400 |
5% |
$204,160 |
| 29 |
62 |
2400 |
5% |
$192,153 |
| 30 |
62 |
2400 |
5% |
$180,717 |
| 31 |
62 |
2400 |
5% |
$169,826 |
| 32 |
62 |
2400 |
5% |
$159,453 |
| 33 |
62 |
2400 |
5% |
$149,575 |
| 34 |
62 |
2400 |
5% |
$140,166 |
| 35 |
62 |
2400 |
5% |
$131,206 |
Suppose one saves or invests $200 consistently every month (or $2400 per year) in dividend paying Unit Trust starting at the age of 25. With an expected return of 5% per annum, he will have a value of $243,908 at the age of 62.
On the other hand, had he delayed his saving plan by 5 years or 10 years, he will have a value of $180,717 and $131,206 respectively at the age of 62. The difference is significant!
Hence, it is never too early to start saving or investing. Start today and take full advantage of the power of compounding!
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