I believe many will not be interested to know that it will take slightly more than 7 years to generate S$2,400 of interest (total) with the following plan - Investing S$200 monthly on an investment product that yields 4% interest.
However, if you leave your investment alone (after 8 years of hard work) for another 30 years, your investment portfolio will have grown to ~ S$72,000. This amount will probably catch more attention.
Crucial Element to Growing Your Investment is Time
The maths is simple. You invest S$200 monthly (works out to be S$2,400 invested annually). With an investment product that yields 4% (plus compound interest), here are the results:
The more time your money has to accumulate compound interest, the larger your investment portfolio will be. Simple Logic! This investment portfolio could be a source to pull out when you retire.
Getting started early makes the difference in your retirement fund. If you choose to stop investing after the 8th year, and leave your money to accumulate the interest, it will have grown to ~S$72,000.
What should you be doing?
First, commit a percentage of your income you will invest each month or year. With just 10% of your income, you can still slowly grow your investment to a considerable sum. A case in point is the example above.
Least Work and Risk Free Returns
Well, you could also park your money in CPF-SA and earn 4-5% risk free returns. You will be almost guaranteed the S$72,000!
Conclusion
Even with a modest income, it is still possible to grow a sizable retirement fund. Start early. Save more. Invest smartly.
