The power of compound interest How important is it to begin putting aside money for savings right now, instead of some time later? Please refer to the example of three individuals - Ahmad, Siti and Zainal - in APPENDIX 1. Each of them consistently invests the same amount of money, i.e. RM3,000, which earns the same interest return of 10% per year. But they start investing at different ages - Ahmad at age 18, Siti at age 22 and Zainal at age 30. When all three retire at age 55, Ahmad has more money than Siti and Zainal. He has RM467,913, whereas Siti has RM449,773, and Zainal has Rm360,300. Ahmad has not only more money at age 55, he has also invested the least amount of money, i.e. RM15,000, compared to Siti who invested RM24,000 and Zainal who invested RM75,000.
Posted on: Wed, 24 Jul 2013 09:11:00 +0000
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