Money Watch – Personal Finance Blog

Turning £100 Into £788

The Motley Fool has an article showing the power of long-term compounding, showing what £1 would be worth today in real terms, were you to be retiring today and had contributed to your pension over various lengths of time.

£1 invested forty years ago has grown to be worth £7.88, thanks to the power of long-term compounding. However, £1 invested twenty years ago would be worth just £2.83 today, thanks to losing out on twenty years of extra growth… Quite simply, £1 put away forty years ago is roughly equivalent to £6 invested five years ago! So, because the value of your ‘retirement pound’ falls rapidly with age, it makes sense to start saving for retirement as early as you can — ideally, when you start your first real job.

I probably don’t have to say this (but I will) – start saving for your retirement as early as possible.

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