Time Value of Money

Time Value of Money

The best thing to do is to start saving/investing money as soon as

possible.  The younger you are, the more money you will have.


Let us give you an example:

Invest $2,000 a year for nine years and start at the age of 21.  On a 10% interest rate, the initial $18,000 you invested will be worth approximately $763,000 by the time you reach the age of 65.  If you have a friend who waits until he/she is 30 to start saving and they save $2,000 a year every year until they are 65 which is a total of $70,000, they will only have $542,048.73, a difference of $220,000 from the person who started at the age of 21.


Time is definitely on your side, so start early!  Imagine what it would be if you started saving even earlier than 21!


What if you have $10,000 invested at various interest rates? After 20 years this is what you would have.


Rule of 72

If you want to know how long it will take to double your money, take the number 72 and divide that number by the interest rate you are getting.  So if you deposit $3,000 into an account with a 2% interest rate, 72 ÷ 2 is 36. So in 36 years you will have $6,000.


If you have an interest rate of 12%, you will make $6,000 in six years.  The higher the interest, the quicker it is.

PHONE: 09 373 0700

FAX: 09 373 0706

EMAIL: info@mont.co.nz


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