Investment, do it when you are Young!

Investment, do it when you are Young!

Something to share:

I knew the concept and importance of investment during 1st year in university. I am glad and awfully thankful to the seniors that provided the valuable exposure which only now, when I am working and financially independent, get to apply what I have learnt into practice. As in those days when my survival solely relied on the PTPTN loan and meager tuition fees from teaching mathematics, I did not have enough money to spare.

Now when I am able and ready to invest, I realized that I had lose out so much due to the compound of interest, which according to Albert Einstein as one of the wonder in the world, in mathematics of course.

A simple scenario would be:

If you plan to have a RM120,000 education fund and have 20 years to raise the fund, let's say you invest in some investments that generates an annual rate of return of 12%, you would need to invest only a little over RM120 a month.

A delay of 5 years, and with 15 years left you will need over RM240 a month. Procrastinate another 10 years, you will have to take almost RM1,470 each month to achieve your target.

For those who had taken the economics subject in uni should be able to do the calculations.

However, it is better to be late than never. I just started investing in another fund under the management of Public Mutual. In fact, I am a certified Public Mutual agent.

For those who doesn't find that the scenario above comprehensive, I will post a table on the power of compound interest for your reference tomorrow.

Don't wait, start when you are young.

Yours sincerely. 03/08/2006

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As promised, the table below will show you The Power of Compound Interest:

Investment Period (Years)	Principal (RM)	Interest (RM)	Total Value (RM)
1	1,200	67	1,267
5	6,000	1,808	7,808
10	12,000	8,655	20,655
15	18,000	23,792	41,792
20	24,000	52,570	76,570
25	30,000	103,789	133,789
35	42,000	340,828	382,282
40	48,000	589,678	636,678

Mode of investment: RM100 at the beginning of each month. Rate of return is 10% per annum and interest income accrued and compounded monthly. The return is more than 13 fold with a mere RM100 per month. I believe most of you working folks are able to fork out more than that monthly, right?

Now do you realized that the sum is not a major problem? It's just that you need to let the compound interest works its magic, with ample time.

Till then.

Yours sincerely.