Discussion Forum Forums Financial Planning Magic of Compound interest

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    UncleSam
    UncleSam
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    In this post i would like to demonstrate to you the magic of compound interest

    Both Samuel and David are good childhood friend with many things in common. The only differences?

    Samuel started allocating $150 monthly for investment ever since his first job (age 21). David on the other hand, only started investing at the age of 35 but invest $300 monthly (twice the amount of Samuel).

    The result?

    Samuel

    Assumption here: investment return rate of 5%

    Samuel

    David

    Assumption here: investment return rate of 5%

    David

    From the table above, At age 55.
    Samuel balance grew to $157,236.63 with a total contributed amount of $61,200.

    David balance grew to $122,237.33 only despite contributing more at $72,000.

    Therefore, it is important to start saving up and allocate part of the saving for investment to benefit from the magic of compound interest.

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