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Compound interest.. from little things big things grow

Tony Sarai
Published by:
Tony Sarai
Published on:
August 08, 2014
Modoras Pty Ltd ABN 86 068 034 908

Compound interest – the sooner you start, the more you’ll have.

Forget about location, location, location being the key to a good investment outcome.  One of the most important ingredients to financial planning success is being regular, regular, regular!

A regular savings plan can turn small amounts of money into a sum that can take you closer to your dreams much faster. All that’s needed is time and discipline.

For example, let’s see what happens to an investment starting with just $100 and adding $100 each week from your regular income. The table below shows what the investment value would reach after five years and up to thirty years. In this example, we have assumed that the investment pays a return of 6% per annum (paid quarterly) and that this return is reinvested.

Compound

The results show that a regular savings habit can turn small sacrifices into real outcomes.  Demonstrating the effect of time and compounding returns on the value of your investment.

The trick is to start soon.

Everyone’s ability to save is different, but even if you can’t save $100 every week, the above figures are still worthy of your attention. For example, if you can save $50 per week simply halve the results. Conversely, if your savings capacity is higher, multiply the results.

Want more information?
SMSF Retirement Planning
Investing for Income when Interest Rates are Low
Why it Pays to Understand the Six Stages of Financial Planning

IMPORTANT INFORMATION: This blog has been prepared by Modoras Accounting (QLD) Pty. Ltd. ABN 81 601 145 215. The information and opinions contained in this blog is general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals’ personal circumstances have been taken into consideration for the preparation of this material. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Accounting (QLD) Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this blog can change without notice. Modoras Accounting (QLD) Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Accounting (QLD) Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Accounting (QLD) Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication. Liability limited by a scheme approved under Professional Standards Legislation.

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