Mr. Save EARLY vs Mr. Save LATER

Maximizing the Power of Compound Interest

Mr. Save EARLY:

-> Invests P20,000/year for 8 years @12% annual interest.

-> Started investing earlier @ age 21 yrs old.

-> Total Contributions = P160,000.

Mr. Save LATER:

-> Invests P20,000/year for 22 years @12% annual interest.

-> Started investing at a later age (29 yrs old).

-> Total Contributions = P440,000.

Whose savings will gain and perform better (and at a much lower cost)?

--> Checkout the results below when both men will reach the age of 50. 

	Mr. Save EARLY @		Mr. Save LATER @
	Annual Interest Rate =	12.00%	Annual Interest Rate =	12.00%
Age	Payment / Contributions	Accumulated Amount (End of Year)	Payment / Contributions	Accumulated Amount (End of Year)
21	20,000	22,400	0	0
22	20,000	47,488	0	0
23	20,000	75,587	0	0
24	20,000	107,057	0	0
25	20,000	142,304	0	0
26	20,000	181,780	0	0
27	20,000	225,994	0	0
28	20,000	275,513	0	0
29	0	308,575	20,000	22,400
30	0	345,604	20,000	47,488
31	0	387,076	20,000	75,587
32	0	433,525	20,000	107,057
33	0	485,548	20,000	142,304
34	0	543,814	20,000	181,780
35	0	609,072	20,000	225,994
36	0	682,160	20,000	275,513
37	0	764,020	20,000	330,975
38	0	855,702	20,000	393,092
39	0	958,386	20,000	462,663
40	0	1,073,393	20,000	540,582
41	0	1,202,200	20,000	627,852
42	0	1,346,464	20,000	725,594
43	0	1,508,039	20,000	835,066
44	0	1,689,004	20,000	957,673
45	0	1,891,684	20,000	1,094,994
46	0	2,118,687	20,000	1,248,794
47	0	2,372,929	20,000	1,421,049
48	0	2,657,680	20,000	1,613,975
49	0	2,976,602	20,000	1,830,052
50	0	3,333,794	20,000	2,072,058
	160,000		440,000
	--> Total Payments		--> Total Payments

Results:

-> Mr. Save EARLY reaped a lot more gains from his investment than Mr. Save LATER (P3,333,794  vs  P2,072,058). A huge difference of P1,261,736. 

-> Mr. Save EARLY was able to achieve this at a very much lower cost than Mr. Save LATER. (P160,000  vs  P440,000).


Important Lessons from the above illustration: 
1.  To maximize the power of compound interest in Savings/Investments, START Saving/Investing EARLY.
2.  Work Smarter, Not Harder. Let the power of compound interest Work For YOU thru Investments, and Not Against YOU thru Loans/Credit Card Debts.