Here is an excerpt:
"Albert Einstein called compound interest "the eight wonder of the world" and rightfully so. Lets consider an example to illustrate it. Two individuals, Ah Huat and John, enters the workforce at 25. Knowing the importance of saving when young, Ah Huat decides to set aside $7000 yearly from age 25 to 35 and does not save further from age 35 to 60; John on the other hand starts to set aside $7000 yearly from age 35 to 60. Both invests in the same investment which yields a 6% return per year. At the age of 60, Ah Huat has amassed $476,782; while John has $438,940. Hence, despite saving for only 10 years as compared to John (25 years), Ah Huat has saved up a larger amount of money thanks to compounding! From this example, it shows how important it is to start saving when young to enjoy this eighth wonder."
Many people are attracted to the dream of financial security and are looking for a way to it.
Start saving when young
Pretty simple.Getting 5 to 6% returns out there, IMO, is pretty decent and achievable especially if we are bench marking it to SPDR STI ETF's annual returns of 6.28%. (Do note on the volatility of the ETF though). So start saving from young! Yours truly did exactly did and is benefiting from it.
Secondly, saving $7,000 annually is easy. For all those new to the workforce, instead of signing up for a $200,000 coverage whole life or savings plan from that "sweet-talking eye candy" in a tight fitting skirt (that last phrase is for guys), why not buy a $200,000 term plan instead. The former will set you back about $3650 per year, while the term will set you back errrmmm, $450?. That's a savings of $3200 of course without the investment component.
Of course, you will want to invest the remainder of the money right, well you can invest it in the STI ETF or REITS, that where 6% returns is achievable but you must be ready for the volatility. Investmentmoats has a few good articles on REITS and ETF. You can read it here and here.
This is Ah Huat
Ah Huat wants to be financially free.
Ah Huat does not believe in internet get rich schemes and on street investment talks.
Ah Huat does his own research, saves from young, saves well and invests wisely (he reads my blog)
Ah Huat is smart.
Be like Ah Huat.
If you are interested on how to save and invest well, here is the link to my first article. At this juncture, I will highlight that investing is risky and one must have appetite to stomach the volatility (that includes passive investing)
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