The Miracle of Compound Interest

Last week I illustrated the impact of delaying retirement savings. So now, have a look at the upside of getting started sooner rather than later.
Case Study:
Peter invests R1000 at the beginning of each year for 10 years running at a return of 10% per annum, then he stops contributing but leaves the funds accumulated so far in the investment to continue growing.

At the beginning of the following year ( Year 11 – on our time-line) Paul, Peter's twin brother starts investing R1000 at the beginning of each year at 10%. He does this for the next 30 years.

This means Peter has invested a total of R10 000 over 10 years & Paul has invested a total of R30 000 over 30 years.

Who has accumulated the most money in their investment?

Peter has R305 908

Paul has R180 943

The difference? Compound growth and time.

What is procrastinating costing you? Getting started is the most important part of investing.

Have an awesome week.