Why nobody seems to be into Pensions and why they should be (part 2)
Author: Russell SmithApril 19, 2013
(drum roll) The answer to yesterday’s blog post is…….go for the 1p.
If you went for the 1p and I went for the £1 million, after 20 whole days, I would have….£1 million and you would have just £5,242.88.
At 25 days, I would have £1 million and you would have £167,772.16.
Even at a full 27 days (87% of the way through the month), my £1 million would still be wiping the floor with your £671,088.64.
Its only on day 28 that you overtake me with £1,342,177.28. If the game ended here, that would be pretty interesting, you’ve beaten my £1 million by 30%. But a month is 31 days and on day 31 you would have….
Over 10 times my amount.
This ladies and gentlement is compound interest.
Okay, you are not going to get a 100% interest rate every year but the point remains, the earlier you start putting your pension contributions into the pot, the more time you have got for the pot to really kick into gear.
The difference between 20, 25 years and 28 years is huge.
So if you haven’t started your pension yet, make sure you start NOW and then you’ve just got to live long enough to get the 28 year kick.