"Do not save what is left after spending; instead spend what is left after saving"
May 16, 2018
Inspired from one the most admired finance gurus in the world, Warren Buffet, Let’s take a look at the benefits of savings when you are young;
Say you start saving when you’re 25. You manage to save $5,000 each year which you put into your Superannuation fund, which nets you 8% in returns per year on average. At 35, you stop putting in money for good, but keep the investments you’ve accumulated so far.
Now, a different scenario. You don’t want to save and invest $5,000 each year in your twenties because hey, you’re young, you want to have fun, you can do the responsible stuff later. So, you start investing at 35, the same sum each year. However, because you started later, you don’t stop after 10 years. Instead, you put in $5,000 every year until you retire at 70.
Here’s the insane part:
The kid who invested from 25 to 35, then never again, ends up with more money. In fact $1,156,619, to be exact. The late bloomer, despite their continued efforts, only makes it to $930,510. That $226,109 could come in handy – as could the extra $5000 a year they had from 35-70
The earlier you start investing the better. It’s never- ever- too late to start though. The most important thing to know about personal finance is this:
If you don’t start playing the game today, you’ve already decided that you will lose it tomorrow.