May 5, 2021 Julie Hyslop

Financial Superpowers Join Forces

Compounding interest can be your very own financial superpower but when combined with the benefits of contributing earlier in life to either your investment portfolio or superannuation, together with investing a small amount but on a regular basis, the financial superpowers of these forces can be harnessed to your advantage and potentially earn you thousands of dollars.

The benefits of compounding interest and contributing earlier to superannuation and investments can be demonstrated in the following example:

Take someone who commences investing at age 30, and invests $200 per week for 10 years, contributing $104,000 versus someone who commences at age 40 and invests $200 per week over 25 years, contributing $260,000. Assuming a return of 9%, the person who contributed from 30 years of age has a significantly larger amount of capital available at 65 totalling $1,595,049, despite contributing 40% less than someone who commences contributing at age 40 and has $952,779 available at age 65.  THE EARLIER YOU START ACCESSING THE BENEFITS OF COMPOUNDING INTEREST THE BETTER THE FINANCIAL OUTCOMES WILL BE!

Investing early does not require you to have access to large lump sums, in fact by investing smaller amounts on a regular basis you are able to have access the benefits of a fluctuating share market:

The above investor purchased 274 shares for $2,000 over ten months. The average price of XYZ shares purchased is $7.29 ($2,000 divided by 274 shares). This is less than the average market price of XYZ shares, which is $7.60 (average in column B). BY MAKING SMALL REGULAR CONTRIBUTIONS THIS INVESTOR PURCHASED MORE SHARES OVERALL FOR A LOWER PRICE!

To ensure you are harnessing these financial superpowers to your advantage contact an Income Solutions Advisor at: contactus@incomesolutions.com.au.

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