📚 Sunday evening read: Compounding your returns 💰

Not to rain on any parades here, but maybe I’ll play devil’s advocate a little…

The problem with the gods of compounding is that most people don’t have much money to spare at the beginning of this magical 20 years, they are busy getting married, setting up home, having kids etc. They are also at the beginning of their careers and are not usually anywhere near their maximum earning capacity. So they can only put a small amount of money in to the magic compounding machine.

Jump forwards 20 years or so in a successful career and the house is paid off, the kids have left and the earning capacity is massive, and with relatively few outgoings, you can seriously add to your retirement savings.

I started a pension in my 20s, but the proportion of its final value in my 50s is maybe 25%. The rest I added in the last 5 years and compounding had little to do with it.

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Man, I don’t even have 10k to start with. :stuck_out_tongue:

These numbers are great for those who do have that sort of money lying around. But I imagine a lot of new, young-middle aged investors probably don’t have that much to throw about. I’ve seen lots of topics popping up with people trying to invest on £50-200 a month if they can (I’m one of them), and fair play to them! When I see people with 5-10k lump sums annually, plus monthly contributions of 1-2k+, I think they’re already on the winning team never mind how they’ll end up with investing! :stuck_out_tongue:

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Easy to get disheartened when you see some sums thrown about from the You Tube self-promoters, however best thing you can do is just put away what you can afford as soon as you are able to.
Patience is the name of the game. Good luck!

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