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Staff Relations
Hotline: 2866-7519
Plan well, live well
In the last Staff Relations column we looked at two saving strategies adopted by two twin brothers. Many colleagues were surprised how the elder twin, who only saved money for seven years from the age of 18 to 24, would have more money than his sibling who saved for 30 years from age 25 to 54.
There is neither magic or an IQ test involved, but simple mathematics. The following table shows how the money grows for the elder twin, with his age, principal amount and interest earned (at 10% p.a.) in the respective columns.
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On reaching his 25th birthday he has accumulated a total of $189,743. With this kept in the bank untouched and earning the same 10 per cent interest per year, on his 55th birthday the sum will have increased to over $3.3 million!
On the other hand, his younger twin starts saving at 25, and using the same age, principal, and interest in the respective columns, this is how his money grows.
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So on reaching his 55th birthday, the younger twin will have accumulated a wealth of about $3.29 million, about $21,000 less than his brother.
We hope this simple example gives you some thoughts on the importance of planning your finances early. Think about saving $20,000 a year in the first seven years of your career and you'll have more than $3 million for your retirement!
The same theory applies to other financial commitments such as marriage, children"s education and owning a flat.
If you have any enquiries feel free to call the Staff Relations hotline.