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memories

Saving & investing your way to $1 million

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Got this from Personal Money, November issue:

For your reference,

Assuming that you plan to retire at age 55.

Your investment can yield 10% annual return rate of return.

See the table below:

At age : 25

How much you need to save monthly : $443

Total deposit : $159,480

Total interest earned : $841,916

At age : 35

How much you need to save monthly : $1,317

Total deposit : $316,080

Total interest earned : $684,009

At age : 45

How much you need to save monthly : $4,882

Total deposit : $585,840

Total interest earned : $414,213

If you observe the table, the younger you save, the lesser you contribute, but the interest earned are high, this is due to compunding interest over time factor.

So save earlier to archieve your financial target.

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Please note that the above calculation is based on an investment that can give you a 10% return for the whole duration. It is not that easy to find an investment to give you that high return in real life. I do however agree that the sooner you save the easier it is for you. Saving is only the first step. Investing in something with a good and steady return is the next step and it is more complicated.

Everyone should start saving and planning for their retirement as soon as they start working.

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I agree with daddyo. Saving is important but without investment, we will lead to a miserable life after our retirement age due to inflation. Hence, we should first save our salary and use the amount that we have accummulated in the investment tools that exist. Only then, our money will compound faster.

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what type of investment is this ?? why no specify ??

Investment here is referenced in a general manner. It could be any type of investment, e.g. stock market, unit trust, mutual funds, real estate etc.

All investments come with certain type of risks. Higher return investments usually have higher risks so you will need to chose your investment strategy wisely.

Most people jump into investing and skip the first step. The first step to investing is SAVINGS. You invest your savings, NOT your disposable income. If you invest using your disposable income that you need to sustain your living expenses, it's called gambling. And remember, investing is long term not short term. When investors invest in a share market, they are looking at 5 to 10 years periods. If you hope to turn a profit in 5 to 10 days, the term is trading rather than investing.

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thanks memories for the info - I have just read this tips elsewhere too, compounding is the power of getting rich! Of course you will need to save and then invest to get return of 10% or more (the higher return the better, of course with higher risk!).

Me still learning learning...hopefully no need to "learn" forever and no action! :P

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yeeha,

usually i read personal money mag, you can find lot useful info there. The articles in this august issue is quite good too.

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yeeha,

usually i read personal money mag, you can find lot useful info there. The articles in this august issue is quite good too.

Hi coffee, thanks! I will try to pick up the mag! :)

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