I have learned to say what my wife says; “Oh if only I had known then what I know now!”
One thing I know now is that if I had saved a little bit from Day 1 and not touched it, it would, over sufficient time and the ‘magic’ of compound interest make me a millionaire. (Time for an old joke. “It was my mother that made me a millionaire.” “Oh really – if I gave her the wool would she make me one!”)
There are I’m sure lots of versions and bits of advice about this – go and Google your own (I don’t give financial advice). This is one I found;
If you’re old enough to read this, it’s probably too late for you to take full advantage of one of the oldest and most foolproof investment plans around: the proven notion that you can retire comfortably if you just save $1 a day. The catch? There are two, actually. First, you must start saving when you’re born. Second, you’ve got to leave your savings to compound, without spending the earnings or paying taxes on them.
But if it’s too late for you to cash in on this idea for yourself — we’ll tell you a little later how much it would take to “catch up” if you didn’t start when you were born — there’s probably a young person in your life who could benefit from this. We’ll show you how to put your investment knowledge to work, along with a modest sum of money, to eventually produce spectacular results for a child, a grandchild, a niece or nephew. The trick — and this is absolutely essential as you will see — is to start early. That means somebody has to do it for the child, at least in the early years.
So here’s the nitty-gritty math: If you save $1 a day, or $365 a year, and invest it for long-term growth that averages 10 percent, from the day you’re born until you are 65, you will wind up with a retirement nest egg of more than $2 million on your 65th birthday. Get a compound rate of return of 11 percent, and you have $3.2 million; 12 percent gives you $5.4 million. And even if you only make 7 percent in long-term bonds you’ll have $450,000.
Of course, it’s not quite as simple as it sounds. Otherwise, everybody would retire as a millionaire. There are five main hurdles and we’ll look at how to overcome each. First, you’ve got to save the $1 a day, and by the time you wise up to this plan, at least a dozen years have probably gone by. Second, you have to leave the money there to build up, no matter what happens before you’re 65. Third, you have to keep your earnings for yourself, not give them away to the tax man. Fourth, you’ve got to achieve a growth rate of at least 8.65 percent in order to hit the $1 million target. Finally, inflation will nibble away at the buying power of your money and 65 years from now, in 2061, $1 million won’t be worth what it is today.
To read the full article go HERE
Get your kids, or grand-kids sorted!
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