A good one to have a look at is moneysmart.gov.au's compound interest calculator, which illustrates what happens when you earn interest on your interest on your interest, and so on.
A $1000 investment left for 20 years, and growing at 7 per cent annually, will quadruple to $4039 over that period.
However, if you add just $25 each week to that investment, at the same growth rate, you end up with $60,472.
And if you can bump that up to just $40 a week, you've got a very tasty $94,000 in 20 years.
Finding that sort of spare cash may seem a little daunting at first, but broken down it's less than $6 a day - less than a packed lunch, a couple of takeaway coffees, or buying petrol on a cheaper day in the weekly discounting cycle.
The most important thing to do when paying yourself first is to never steal from yourself by withdrawing that cash for a short-term emergency.
If you're prone to financial emergencies, set up another account to cover them.
The numbers stack up. Paying yourself first makes good sense, and can produce big dollars.
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My response :
Please let me know where you can get investment that grow at 7% annually for 20 years without fail, after tax, that you can add on every week at the same entry price and I'll start saving on it.
