Do you want to know the power of saving with fund? Please take a look of the following cases:
Miss Lam started her saving investment plan at the age of 21 with an annual investment amount $36,000 ($3,000 per month). She continued to invest the same amount of money for 15 years until the age of 35 and then stopped any further contribution. The accumulated amount was kept in the saving plan for further growing until retirement at age 60.
Mr. Ma started his saving investment plan at the age of 36 with an annual investment amount $36,000 ($3,000 per month). He continued to invest the same amount of money for 25 years until retirement at age 60.
| Miss Lam |
21 |
35 |
15 Years |
$540,000 |
$2,762,147 |
$9,934,844 |
| Mr. Ma |
36 |
60 |
25 Years |
$900,000 |
$1,804,084 |
$3,323,663 |
Now, you can see the power of saving with funds! Miss Lam had invested 10 years less than Mr. Ma, but the accumulated value she got at the age of 60 was even more than that of Mr. Ma!
How could the saving with funds have such a huge power? Actually, the miracle of time value is the basic of saving with funds. The "Compound Interest Formula" could illustrate:
Sum = Principal x (1 + Interest Rate) no. of periods
As the number of periods is an index, when it increases, the sum increases even more like a rolling snowball due to the compound effect.
"Time is Money", because of the strength of "Compound Effect", the earlier one starts to invest, the more satisfying return becomes. This is why the earlier investor, Miss Lam, invested less but was rewarded more.
Appendix 1 - Annual Investment Detail:
(5% Annual Return Rate) |
 Back |
| 21 | $36,000 | $37,800 | $0 | $0 |
| 22 | $36,000 | $77,490 | $0 | $0 |
| 23 | $36,000 | $119,165 | $0 | $0 |
| 24 | $36,000 | $162,923 | $0 | $0 |
| 25 | $36,000 | $208,869 | $0 | $0 |
| 26 | $36,000 | $257,112 | $0 | $0 |
| 27 | $36,000 | $307,768 | $0 | $0 |
| 28 | $36,000 | $360,956 | $0 | $0 |
| 29 | $36,000 | $416,804 | $0 | $0 |
| 30 | $36,000 | $475,444 | $0 | $0 |
| 31 | $36,000 | $537,017 | $0 | $0 |
| 32 | $36,000 | $601,667 | $0 | $0 |
| 33 | $36,000 | $669,551 | $0 | $0 |
| 34 | $36,000 | $740,828 | $0 | $0 |
| 35 | $36,000 | $815,670 | $0 | $0 |
| 36 | $0 | $856,453 | $36,000 | $37,800 |
| 37 | $0 | $899,276 | $36,000 | $77,490 |
| 38 | $0 | $944,240 | $36,000 | $119,165 |
| 39 | $0 | $991,452 | $36,000 | $162,923 |
| 40 | $0 | $1,041,024 | $36,000 | $208,869 |
| 41 | $0 | $1,093,075 | $36,000 | $257,112 |
| 42 | $0 | $1,147,729 | $36,000 | $307,768 |
| 43 | $0 | $1,205,116 | $36,000 | $360,956 |
| 44 | $0 | $1,265,371 | $36,000 | $416,804 |
| 45 | $0 | $1,328,640 | $36,000 | $475,444 |
| 46 | $0 | $1,395,072 | $36,000 | $537,017 |
| 47 | $0 | $1,464,826 | $36,000 | $601,667 |
| 48 | $0 | $1,538,067 | $36,000 | $669,551 |
| 49 | $0 | $1,614,970 | $36,000 | $740,828 |
| 50 | $0 | $1,695,719 | $36,000 | $815,670 |
| 51 | $0 | $1,780,505 | $36,000 | $894,253 |
| 52 | $0 | $1,869,530 | $36,000 | $976,766 |
| 53 | $0 | $1,963,006 | $36,000 | $1,063,404 |
| 54 | $0 | $2,061,157 | $36,000 | $1,154,374 |
| 55 | $0 | $2,164,215 | $36,000 | $1,249,893 |
| 56 | $0 | $2,272,425 | $36,000 | $1,350,188 |
| 57 | $0 | $2,386,047 | $36,000 | $1,455,497 |
| 58 | $0 | $2,505,349 | $36,000 | $1,566,072 |
| 59 | $0 | $2,630,616 | $36,000 | $1,682,176 |
| 60 | $0 | $2,762,147 | $36,000 | $1,804,084 |
| 61 | $0 | $2,900,254 | $36,000 | $1,932,089 |
| 62 | $0 | $3,045,267 | $36,000 | $2,066,493 |
| 63 | $0 | $3,197,531 | $36,000 | $2,207,618 |
| 64 | $0 | $3,357,407 | $36,000 | $2,355,799 |
| 65 | $0 | $3,525,277 | $36,000 | $2,511,388 |
Appendix 2 - Annual Investment Detail:
(9% Annual Return Rate) |
Back |
| 21 | $36,000 | $39,240 | $0 | $0 |
| 22 | $36,000 | $82,012 | $0 | $0 |
| 23 | $36,000 | $128,633 | $0 | $0 |
| 24 | $36,000 | $179,450 | $0 | $0 |
| 25 | $36,000 | $234,840 | $0 | $0 |
| 26 | $36,000 | $295,216 | $0 | $0 |
| 27 | $36,000 | $361,025 | $0 | $0 |
| 28 | $36,000 | $432,757 | $0 | $0 |
| 29 | $36,000 | $510,945 | $0 | $0 |
| 30 | $36,000 | $596,171 | $0 | $0 |
| 31 | $36,000 | $689,066 | $0 | $0 |
| 32 | $36,000 | $790,322 | $0 | $0 |
| 33 | $36,000 | $900,691 | $0 | $0 |
| 34 | $36,000 | $1,020,993 | $0 | $0 |
| 35 | $36,000 | $1,152,122 | $0 | $0 |
| 36 | $0 | $1,255,813 | $36,000 | $39,240 |
| 37 | $0 | $1,368,837 | $36,000 | $82,012 |
| 38 | $0 | $1,492,032 | $36,000 | $128,633 |
| 39 | 0 | 1,626,315 | $36,000 | $179,450 |
| 40 | $0 | $1,772,683 | $36,000 | $234,840 |
| 41 | $0 | $1,932,225 | $36,000 | $295,216 |
| 42 | $0 | $2,106,125 | $36,000 | $361,025 |
| 43 | $0 | $2,295,676 | $36,000 | $432,757 |
| 44 | $0 | $2,502,287 | $36,000 | $510,945 |
| 45 | $0 | $2,727,493 | $36,000 | $596,171 |
| 46 | $0 | $2,972,967 | $36,000 | $689,066 |
| 47 | $0 | $3,240,534 | $36,000 | $790,322 |
| 48 | $0 | $3,532,182 | $36,000 | $900,691 |
| 49 | $0 | $3,850,078 | $36,000 | $1,020,993 |
| 50 | $0 | $4,196,585 | $36,000 | $1,152,122 |
| 51 | $0 | $4,574,278 | $36,000 | $1,295,053 |
| 52 | $0 | $4,985,963 | $36,000 | $1,450,848 |
| 53 | $0 | $5,434,700 | $36,000 | $1,620,665 |
| 54 | $0 | $5,923,823 | $36,000 | $1,805,764 |
| 55 | $0 | $6,456,967 | $36,000 | $2,007,523 |
| 56 | $0 | $7,038,094 | $36,000 | $2,227,440 |
| 57 | $0 | $7,671,522 | $36,000 | $2,467,150 |
| 58 | $0 | $8,361,959 | $36,000 | $2,728,433 |
| 59 | $0 | $9,114,536 | $36,000 | $3,013,232 |
| 60 | $0 | $9,934,844 | $36,000 | $3,323,663 |
| 61 | $0 | $10,828,980 | $36,000 | $3,662,033 |
| 62 | $0 | $11,803,588 | $36,000 | $4,030,856 |
| 63 | $0 | $12,865,911 | $36,000 | $4,432,873 |
| 64 | $0 | $14,023,843 | $36,000 | $4,871,071 |
| 65 | $0 | $15,285,989 | $36,000 | $5,348,708 |
Disclaimer: This hypothetical example is for education purposes. Values are for illustrative purposes only and do not reflect the performance of any particular investment. Your own returns may be greater or less than this hypothetical example. Actual rates of return for the period shown will vary over time.
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Disclaimers