How rich can your regular savings make you?

Are you concerned that you don’t have enough money to invest? Or maybe you think it’s too late for you to get results? Don’t be discouraged, check out the regular savings calculator to see what can you do to impact your future!

How rich can your regular savings make you?

Ever wondered how rich people get richer? They invest their savings. When money makes more money, it means compound interest is at work.

A 20 year old person could reach ca. £1mn at the age of 65 by investing as little as £120/month. £120 represents 7% of a median net UK salary. It doesn’t sound too much, does it?

For comparison: a 40-years-old person would need to invest as much as £800/month to reach the same amount at that age.

How did we calculate this? 10% is assumed to be an average yearly market growth rate. This value can be valid only for long term investments (i.e. longer than 10 years). If you calculate shorter term, it is advisable to use a lower % rate e.g. 5-6%. In the examples above, we used a compound interest calculator and have applied a 10% compounding rate and the number of years required to reach the age of 65. 

Check it out yourself! This simple compound interest calculator will demonstrate results by using your own assumptions of amount, compounding rate and investment period. 

This tool can also be used as a regular savings calculator if you’d like to compare the benefits of saving vs. investing. In the UK, the interest rates of savings accounts rarely exceed 2%, so please adjust the % interest rates accordingly.

The Bottom Line

There’s a common saying that goes “the best time for new beginnings is NOW”. You too can have an impact on your financial future, irrespective of your current stage in life. Get inspired with our step-by-step start guide to budgeting money and building wealth and use the regular savings calculator to start your journey. Become your better financial self. Every day.

Check out our blog for more resources on financial planning, passive income streams and UK money topics in general.

Posted: April 13, 2020