THOUGHT OF THE WEEK
FOUR REASONS TO INVEST NOW (PART 2)
2. When you invest now, you need to invest less money to enjoy a greater payoff Now let us imagine two investors who started investing for their retirement at different times. One of them invests lesser than the other but ends up with more money in retirement as demonstrated below:
Mr. Ameyaw is 30 years old and has a well-paying job. After an investment seminar with NIMED Capital Limited, he is motivated to invest for his retirement immediately. His salary is GHS 2,000.00 a month. He decides to invest GHS 250 of his salary monthly until retirement at an average rate of 15%. Upon retiring at an age of 60 years his investment was worth GHS 1,407,942.60 (This is made up of total principal of GHs 90,000.00 and interest of GHS 1,317,942.62)
At age 40, Mr. Ameyaw’s investment account was worth GHS 65,754.55. He decided to stop adding any extra money so that is current retirement balance of GHS 65,754.55 will run till his retirement (this means he only invested for 10years). At age 60 when it was time to retire, his retirement account was now worth GHS 1,076,174.30 without any new additional investment after he was 40years old
Mr. Asare did not attend that investment seminar and only began investing at age 40. At age 40, Mr. Asare invests the exact amount Mr. Ameyaw invested monthly which was GHS 250. He continued this until his retirement. This means he invested for 20years, which is more than the 10years investment Mr. Ameyaw did in the second scenario. On retirement, Mr. Asare’s investment was worth GHS 331,768.36.
Now let us compare the 2
Mr. Ameyaw invested a total of GHS 250 monthly for 10 years (GHS 30,000) and ended up with GHS 1,076,174.30 at retirement Mr. Asare invested a total of GHS 250 monthly for 20 years (GHS 60,000) which is double of what Mr. Ameyaw invested but ended up with GHS 331,768.36. This is the second reason to start investing now. When you start investing early, it is easier to amass more money with smaller investment amounts through the
compounding effect... (To be continued)
This weekly report is the copyright of NIMED Capital Ltd. (NIMED), an investment banking company licensed and regulated by the Securities and Exchange Commission (S.E.C.) of Ghana as Investment Advisers as well as the National Pensions Regulatory Authority (N.P.R.A.) as an approved Pension Fund Manager. Information and opinions herein have been compiled or arrived at based on information obtained from sources considered reliable; we therefore do not hold ourselves responsible for its completeness or accuracy. All statements of opinion, projections, forecasts, or those relating to expectations regarding future events or performance of investments represent NIMED’s own assessment and interpretation of information currently available to NIMED, which are subject to change.