Saving for our futures and retirement isn’t really something most people want to think about. It means having to contemplate a time when we’re no longer working and often in the final quarter of our lives. Many people choose to bury their heads in the sand for the impending eventuality or go into survival mode of “I’ll think about later”.

But what if it wasn’t as scary or as difficult as you might think?

 

compound interest effect

 

The difference between the security of a safe future and one filled with uncertainty could be as little as the cost of a cup of coffee. The average cup of coffee in the UK is approximately £2. If you sacrificed just 1 cup of coffee per day and put that into a savings account that accumulated 5% interest per year, by the end of the year you could have accumulated £736.73. Doesn’t really seem like something to write home about does it?

Well here’s the fun part, the power of compounding interest means that over time, your investment could amount to a large lump sum without you even having to do anything. In the words of Albert Einstein:

 

‘Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.

Compound interest is the most powerful force in the universe.’

 

With the power of compounding interest, if you put away £2 per day or, for the sake of this example let’s say its £60 per month and was able to earn an average of 5% compounding interest monthly, by the time you had done this for 40 years your daily sacrifice of 1 cup of coffee would be worth £91,561.21. Your investment would have earned £62,761.21 for doing absolutely nothing.

The table below shows how the figures accumulate the longer you continue to invest and provided you can earn a rate of 5%. We have used 5% in line with Financial Conduct Authority (FCA) regulations, to provide an estimated return for a fund at the mid growth rate.

 

<ahref=”https://www.gatecapitalgroup.com/wealth/wp-content/uploads/2019/04/Screenshot-2019-04-10-14.05.26-min.png”>Compound interest Uk Table

 

It almost seems unimaginable and difficult to believe; however, the illustration below shows how these figures are achieved using 2 simple forces. ‘The power of your daily contribution of 1 cup of coffee’ alongside ‘the magic of compound interest.’

Compound Interest Graph UK

The important thing to notice is that the graph shows the returns growing at a substantial rate or snowballing after approximately 18 years. If you were able to increase your investment to £170 per month, after 40 years you will have invested £81,600 and be sitting on the government recommended nest egg of £260,000 (Former Pensions Minister Steve Webb). Imagine if you were able to put in more money and started sooner rather than later.

 

Why not use our calculators to see how much you need to put away to achieve your goals?

 

For more information specific to saving for your retirement be sure to read the following article.

 

What is achievable?

In the example above, we’ve looked at how one cup of coffee can amount to over £90,000 if combined with the power of compounding interest at a rate of 5%. However, it is entirely possibly to achieve a much higher return, if you know what you’re doing, and you have a bigger appetite for risk. For those with a longer time frame and comfortable with taking more risk; a return of 8% could turn your daily cup of coffee into £210,856.87.

All investment decisions should be considered extremely carefully, and we would advise that you only make these decisions after seeking regulated and qualified independent financial advice. The role of an adviser is to understand your knowledge and experience with investments, your attitude to investment risk and your capacity for loss.

 

One of our financial advisers would be happy to talk you through these and discuss your individual situation. Please feel free to get in touch.

 

Now there are some of you reading this right now, with a feeling of dread sitting in your stomach as the reality may have dawned on you that you may be too late, and your future is doomed. I can assure you this is not the case and we can work with any individual in any situation and put a strategy together that is achievable for you.

 

The earlier you save the better

Credit:https://www.businessinsider.com

 

The graph above shows 3 individuals who start investing at different times. What’s undeniable is that ‘she’ who invests the earliest is in the best position. However, if we look at the other 2 individuals, we can see that by increasing your contribution you can quickly overtake the individual who invested at 35 and bridge the gap.

To find out how we can assist you, give us a call or send us an email and let’s work together to get your future secured.

 

So why aren’t we all investing?

It seems like a no brainer, doesn’t it? The question is why aren’t more people investing for their futures?

 

Overcoming Fear and Procrastination

Information overload now means that we have so many accessible resources and an abundance of books to read as well as YouTube videos to watch, we are able to ‘research’ till the cows come home. Combine this with ‘There’s enough information out there for me to do it on my own. Why do I need to pay somebody or give someone a cut out of my profits when I can do this myself for free’.

 

Motivational financial quote

 

These very legitimate and quite savvy ways of living life can very easily be regarded as valid points and showcase you as someone who takes charge of his or her future. This may well be the case and you might be the sort of person who puts your mind to something and gets it done. On the flip side, often it could be argued that these are incredibly well put together masks covering up procrastination, which almost always stems from fear.

 

‘The fact of the matter is this, every day you delay putting away an amount as small as 1 cup of coffee you could be costing yourself an incredible amount of money in the future.’

 

Working with a financial adviser who has invested time energy and money in themselves is like having your own tour guide to show you around a city you may have heard of but never really been to. They can teach you ways of exploring you didn’t know were there and point out pitfalls that that could be quite painful. Through their guidance, you can learn without losing out on the possibility of another day of compound interest from your future self.

 

Get in touch with one of our advisers for a free consultation and you could benefit from your own personal tour to understand the opportunities that lay ahead.

 

Developing Discipline and Patience

If we refer to the example, the big money returns start snowballing after approximately 18 years. This means the prospect of having to wait a long time before seeing any real money returns on our investment. In the age of get rich quick schemes and ‘you can lose a stone in 2 weeks’, we have developed a culture of instant gratification. Discipline and patience are virtues we all wish to have but our ever-lessening attention spans are making this a rarer quality.

 

The average millionaire has around 7 income streams and investing is usually one of them.

 

Whether you’re in a job you love/hate or working to grow a business; investing could be a way of boosting your income as well as assisting to secure your future. Minimal time is needed on your behalf and it could be less than a cup coffee.

 

Everyone wants to be an entrepreneur or a millionaire, however, in order to achieve these things, it’s important to emulate the traits and develop the mind-set of these people.

 

Warren Buffet bought his first stock at the age of 11 and made 99% of his money after the age of 50. He’s now worth $82.9Billion. His method was to grow his wealth at a slow and steady pace and continue to learn along the way.

 

Taking Decisive Action

 

The world is moving at a faster pace, we are now reachable in numerous ways including social media. We have an ever-growing list of things to do and tend to put the important things to one side as there’s no impending deadline to get them done.

benefits of the compounding effect

‘You will never go broke from investing in yourself’

 

The most precious resource we have is our time and it is important we allocate it wisely. Investing in ourselves is the only way we can take charge of our futures and carve out our own paths. Call one of our advisers today and we can work alongside you towards creating the future you want.

 

 

Contact

Tel: 020  7078 8085

Email: hellowealth@gatecapitalgroup.com

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.

Saving for our futures and retirement isn’t really something most people want to think about. It means having to contemplate a time when we’re no longer working and often in the final quarter of our lives. Many people choose to bury their heads in the sand for the impending eventuality or go into survival mode of “I’ll think about later”.

 

But what if it wasn’t as scary or as difficult as you might think?

 

compound interest effect

 

The difference between the security of a safe future and one filled with uncertainty could be as little as the cost of a cup of coffee. The average cup of coffee in the UK is approximately £2. If you sacrificed just 1 cup of coffee per day and put that into a savings account that accumulated 5% interest per year, by the end of the year you could have accumulated £736.73. Doesn’t really seem like something to write home about does it?

Well here’s the fun part, the power of compounding interest means that over time, your investment could amount to a large lump sum without you even having to do anything. In the words of Albert Einstein:

 

‘Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.

Compound interest is the most powerful force in the universe.’

 

With the power of compounding interest, if you put away £2 per day or, for the sake of this example let’s say its £60 per month and was able to earn an average of 5% compounding interest monthly, by the time you had done this for 40 years your daily sacrifice of 1 cup of coffee would be worth £91,561.21. Your investment would have earned £62,761.21 for doing absolutely nothing.

The table below shows how the figures accumulate the longer you continue to invest and provided you can earn a rate of 5%. We have used 5% in line with Financial Conduct Authority (FCA) regulations, to provide an estimated return for a fund at the mid growth rate.

 

Compound interest Uk Table

 

It almost seems unimaginable and difficult to believe; however, the illustration below shows how these figures are achieved using 2 simple forces. ‘The power of your daily contribution of 1 cup of coffee’ alongside ‘the magic of compound interest.’

 

Compound Interest Graph UK

The important thing to notice is that the graph shows the returns growing at a substantial rate or snowballing after approximately 18 years. If you were able to increase your investment to £170 per month, after 40 years you will have invested £81,600 and be sitting on the government recommended nest egg of £260,000 (Former Pensions Minister Steve Webb). Imagine if you were able to put in more money and started sooner rather than later.

 

Why not use our calculators to see how much you need to put away to achieve your goals?

 

For more information specific to saving for your retirement be sure to read the following article.

 

What is achievable?

In the example above, we’ve looked at how one cup of coffee can amount to over £90,000 if combined with the power of compounding interest at a rate of 5%. However, it is entirely possibly to achieve a much higher return, if you know what you’re doing, and you have a bigger appetite for risk. For those with a longer time frame and comfortable with taking more risk; a return of 8% could turn your daily cup of coffee into £210,856.87.

All investment decisions should be considered extremely carefully, and we would advise that you only make these decisions after seeking regulated and qualified independent financial advice. The role of an adviser is to understand your knowledge and experience with investments, your attitude to investment risk and your capacity for loss.

 

One of our financial advisers would be happy to talk you through these and discuss your individual situation. Please feel free to get in touch.

 

Now there are some of you reading this right now, with a feeling of dread sitting in your stomach as the reality may have dawned on you that you may be too late, and your future is doomed. I can assure you this is not the case and we can work with any individual in any situation and put a strategy together that is achievable for you.

 

The earlier you save the better

Credit:https://www.businessinsider.com

 

The graph above shows 3 individuals who start investing at different times. What’s undeniable is that ‘she’ who invests the earliest is in the best position. However, if we look at the other 2 individuals, we can see that by increasing your contribution you can quickly overtake the individual who invested at 35 and bridge the gap.

To find out how we can assist you, give us a call or send us an email and let’s work together to get your future secured.

 

So why aren’t we all investing?

It seems like a no brainer, doesn’t it? The question is why aren’t more people investing for their futures?

 

Overcoming Fear and Procrastination

Information overload now means that we have so many accessible resources and an abundance of books to read as well as YouTube videos to watch, we are able to ‘research’ till the cows come home. Combine this with ‘There’s enough information out there for me to do it on my own. Why do I need to pay somebody or give someone a cut out of my profits when I can do this myself for free’.

 

Motivational financial quote

 

These very legitimate and quite savvy ways of living life can very easily be regarded as valid points and showcase you as someone who takes charge of his or her future. This may well be the case and you might be the sort of person who puts your mind to something and gets it done. On the flip side, often it could be argued that these are incredibly well put together masks covering up procrastination, which almost always stems from fear.

 

‘The fact of the matter is this, every day you delay putting away an amount as small as 1 cup of coffee you could be costing yourself an incredible amount of money in the future.’

 

Working with a financial adviser who has invested time energy and money in themselves is like having your own tour guide to show you around a city you may have heard of but never really been to. They can teach you ways of exploring you didn’t know were there and point out pitfalls that that could be quite painful. Through their guidance, you can learn without losing out on the possibility of another day of compound interest from your future self.

 

Get in touch with one of our advisers for a free consultation and you could benefit from your own personal tour to understand the opportunities that lay ahead.

 

Developing Discipline and Patience

If we refer to the example, the big money returns start snowballing after approximately 18 years. This means the prospect of having to wait a long time before seeing any real money returns on our investment. In the age of get rich quick schemes and ‘you can lose a stone in 2 weeks’, we have developed a culture of instant gratification. Discipline and patience are virtues we all wish to have but our ever-lessening attention spans are making this a rarer quality.

 

The average millionaire has around 7 income streams and investing is usually one of them.

 

Whether you’re in a job you love/hate or working to grow a business; investing could be a way of boosting your income as well as assisting to secure your future. Minimal time is needed on your behalf and it could be less than a cup coffee.

 

Everyone wants to be an entrepreneur or a millionaire, however, in order to achieve these things, it’s important to emulate the traits and develop the mind-set of these people.

 

Warren Buffet bought his first stock at the age of 11 and made 99% of his money after the age of 50. He’s now worth $82.9Billion. His method was to grow his wealth at a slow and steady pace and continue to learn along the way.

 

Taking Decisive Action

 

The world is moving at a faster pace, we are now reachable in numerous ways including social media. We have an ever-growing list of things to do and tend to put the important things to one side as there’s no impending deadline to get them done.

benefits of the compounding effect

‘You will never go broke from investing in yourself’

 

The most precious resource we have is our time and it is important we allocate it wisely. Investing in ourselves is the only way we can take charge of our futures and carve out our own paths. Call one of our advisers today and we can work alongside you towards creating the future you want.

 

 

Contact

Tel: 020  7078 8085

Email: hellowealth@gatecapitalgroup.com

 

Disclaimer: Our articles are for informational and educational purposes only and do not constitute professional financial advice. We would recommend that you always seek independent advice which is tailored to your individual circumstances. Our content is based on our opinion and do not reflect the ideas, ideologies, or points of view of any organisation that we are affiliated with. The information is authentic to the best of our knowledge and as such maybe prone to errors and absence of some key information.