Already a subscriber?You don’t need a high-paying job or wealthy parents to create serious wealth if you harness the power of compound interest, save regularly, target growth assets such as shares, and stay invested for the long term, investing experts say.Any saver can turn an initial deposit of $5000 into $416,325 over 20 years by earning an annual return of 10 per cent and investing an additional $500 each month into their investment kitty.
“The earlier you start investing, the more time your money has to grow. Even modest investments can become large over decades,” she says. “Being consistent and investing over the long term is important because regular contributions – no matter how small – add up over time.”Somebody who invested $10,000 in the Nasdaq 100 index in 2007 and added just $500 a month would be sitting on $724,707 today , based on its compound return of 16.6 per cent.
For example, she says a 25-year-old could reach a net worth of $1 million by 60 if they invested $600 a month, assuming an average annual return of 8 per cent. But if they waited five more years to start investing, they would have to invest $900 a month just to reach that same $1 million goal. “That’s an additional return of $53,900,” Horton says. “Put another way, that’s 53.9 per more on your investment over time.”
Australian fund manager Emanuel Datt, founder of Datt Capital, agrees that retail investors are better off ignoring the regular calls around imminent market crashes.
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