Home » blogs » The Amazing Power Of Compound Interest

The Amazing Power Of Compound Interest

If you were to ask a 25-year-old where their superannuation is invested, at least half of them would have no clue. They probably would not be able to tell you what fund it is in. If they do know the actual fund, try asking them about the portfolio they have within their fund. It is likely by now that you will find at least three-quarters of 25-year-olds have little to no engagement with their superannuation whatsoever. It is understandable though as it is money that they are not able to touch until they are 60 and are likely to be 65 or older by the time that they retire. Why worry about it now?

ABOUT US
The amazing power of compound interest
Melanie-Basta-200x200-Square.jpg

Written by

BERIVAN DUBIER
Last Updated Jun 16, 2021
|
Fact checked
|

Invested In You

Your financial journey is an inherent part of your well-being and happiness. When you feel confident and your finances are healthy and secure, the other areas of your life are balanced and supported.

This is why our professional services go well beyond tax compliance and corporate accounting services. At Curve Accountants, our comprehensive approach is designed to present you with proactive, tailored advice that allows you to make smart financial decisions. From strategies for managing wealth and minimising tax to succession planning and business restructuring, we are committed to offering advice tailored to your unique situation.

Learn More

The Amazing Power Of Compound Interest

It is because now is the most important time for them to worry about their super – and the reason behind that is because of the impact of compound interest.

Take as an example Melissa, a 25-year-old that has $20,000 in her superannuation. The default product that she is invested in is the balanced product, but she also has options to choose more conservative or more aggressive portfolios. The money will still be in her super fund for another 40 years. How important is a small increase in the rate of return to what she already has in her super?

$20,000 invested for 40 years at a rate of return of 5% will equal $140,899.80 in 40 years. At an inflation rate of 2% that is the equivalent of $63,767 in today’s money. It is still a good result, but how could it be made better? Investing $20,000 for 40 years at 7% would net $299,489 or $135,636 in today’s money. That is almost double the money that had been initially invested.

Now is a crucial time for everyone, young and old, to consider their superannuation portfolio to ensure that they are always receiving the best return possible. It will be far too late to do so when they hit retirement age after all.

Helpful tip:

icon

Starting to save or invest early allows compound interest more time to grow your wealth. Make regular contributions whenever possible, even if the amounts are small. Staying invested over the long term can have a significant impact on your financial future.

BERIVAN DUBIER

DIRECTOR

Reviewed by

David-Rayfield-200x200-Square.jpg

SEAN DWYER

DIRECTOR
CPA and financial adviser for over 25 years. Loves to help businesses grow. Dad, jogger, cyclist, windsurfer and bad skier.

Edited by

David-Rayfield-200x200-Square.jpg (1)

Alix Dower

PRACTICE MANAGER

I’m like a ninja with spreadsheets and a detective with data, passionate about problem solving and providing solutions. Experienced Practice Manager with a demonstrated history of working in the financial services industry.
Are you a business or medical professional who’s ready to secure your financial future? Book a free consultation with the team at Curve Accountants today!
CONTACT US

Free eBook Download

David-Rayfield-200x200-Square.jpg (2)

Starting A Medical Practice

David has extensive experience in writing, editing and marketing before joining iSelect in 2023 as Digital Editor. When not making our content better, you can find them browsing log cabins for sale in the forest.
REQUEST DOWNLOAD

David-Rayfield-200x200-Square.jpg (3)

Buying An Established Medical Practice

A mark of a good practice is a demonstrable ability to produce an above-average return for its owners. This ebook outlines the importance of this and strategies for prospective buyers..
REQUEST DOWNLOAD

FAQ

Lorem ipsum dolor sit amet?

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.

Consectetur adipiscing elit sed do eiusmod?

Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat.

Duis aute irure dolor in reprehenderit?

Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.

Excepteur sint occaecat cupidatat non proident?

Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.

Related Blogs

Find Out How Curve Accountants Can Help

Owning your own business or practice is a defining characteristic of who you are. By partnering with Curve Accountants to support you in your business finances, together we can have open and honest conversations about money, and bring fresh thinking and creative ideas to amplify the exact financial goals you want to work towards. Just as your own customers, clients, or patients trust you implicitly to provide them with the best advice and outcome, we believe the same should be achieved for your financial health. Get in touch with us today to book a free consultation with an industry-accredited tax and business accountant Melbourne-wide, from either our head office in Sandringham, or our office.
CONTACT US
Curve Accountants office reception