Becoming a Successful Entrepreneur

Friday, September 02, 2005

Time, Return, & Amount

If inflation averages just 4% over the next 35 years, an income of $30,000 today will have to grow to $118,000 just to keep up. You can better prepare your future by focusing on the following principles when investing:

Time: If you invest $200 a month for the next 35 years and earn 8%, your RRSP will grow to $426,000. If you wait five years (oh, first I’d rather pay off my student loan, take a trip, buy a cat, etc.), you will end up with $283,000. Waiting a measly five years has cost you close to $143,000.

Rate of Return: Let’s say that you could average 9% on your $200 a month instead of 8%. Now you’d find yourself with $537,000 (difference of $111,000). What's this mean? Do some research and get the highest rate of return you can!

Money Invested: Let’s take that $200 a month and increase it each year (say 4%) as you get raises to keep up with inflation. At a 9% rate of return, you’d have $817,000.

Adjusting just one of these three factors by a small amount will affect your future drastically.

- Information quoted from "The Investment Book", by Kevin Cork.

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