The Most Powerful Force in the Universe is
“The most powerful force in the universe is compound interest”
You might wonder why there’s something in Salad Days (which let’s face it is supposed to be on the subject of children) about pension planning! You can hardly plan next week’s meals let alone your retirement - which is that distant day when you imagine you will be able to keep the house up square and have a night out occasionally. Maybe you say to yourself “I’ll worry about the money a bit nearer the time”, or “why put money away when we really need it now?”
We’re told the Government might not be able to pay us much when we get old so planning for ourselves now means we might not be a burden on our children (there’s the link!).
So whilst you’re waiting for your child’s club to finish, or between ironing stints when you need to sit down- if only for 5 minutes - just ponder on “the Powerful Force of Compound Interest”!
Some people claim not to understand compound interest, yet we all recognise its effect when we see it. Compound interest works in the same way as compound growth. The longer the period available, the more could be achieved.
We can choose how much we want to contribute and when, so that helps give us a choice of when we retire and what we can do in retirement. The younger you are when you start a plan, the more powerful the force!
Example: (see assumptions below*)
Based on an annual investment of £10,000
Age at start Potential
Fund at 60 yrs
30 yrs £468,000
45 yrs £187,000
Reduction in fund by delaying 15yrs=60%.
Pension contributions should be seen as a necessary expense: just like the heating and lighting bills. You can contribute annually - but monthly payments both smooth out bumps in the investment market and make it easier for you to budget
*This example makes a number of assumptions:
The average annual investment growth before charges is 4.65% each year.
Investment charges of 1.91% each year.
Contributions are invested on the same day in each year in a pension and are shown before charges are taken into account.
The example is only an illustration and actual investment returns may be more or less than those assumed in the illustration.
Please note that these benefits are not guaranteed. Benefits depend on how the investment grows and its tax treatment.
Contributions are not limited by the Annual Allowance or by earnings.
To receive a complimentary guide covering Wealth Management, Retirement Planning or
Inheritance Tax Planning, contact:
Chris Harris Wealth Management Ltd
T: 01376 501947/07427 507000