Investing in Tomorrow: Unlocking the Power of Time and Compound Interest
- May 3, 2024
- 2 min read
Updated: Feb 14, 2025
To grow and compound
Many of us have heard the proverb ‘The best time to plant a tree is 20 years ago. The second best time is now.’
Did you know if you invested £100 per month into a pension or stocks and shares ISA for 40 years, from the age of 25 to 65, at an average return of 6%, you would end up with £196,000. If you started at age 35, only 10 years later, you would end up with £100,000. Roughly half.
The simple fact is the monies invested between 25-35 have so much longer to grow and compound, giving such a different outcome.
Retirement
Younger people, who are generally able to save less, often feel the amounts they are able to save each month towards a retirement goal so far away are making little difference. In fact, they are probably the most important contributions they will make.
Pension age
People in their 30s and 40s are often worried they have left it too late, especially if they have little existing provision. Daunting as it is, at the age of 30, you still have 38 years to go until state pension age (under current rules.) There can be lots of demands on cashflow during this period. Many LGBT+ people are now getting married, having children, buying properties together etc, and this can often lead to feeling that saving is something they will hold off for a few more years. Even modest amounts can make a huge long-term difference.
Pension scheme
Often, when clients have joined a company and their pension scheme, they have ticked a box for which fund to be invested in and never given it another thought. It’s so frustrating when we come to review a client’s fund after 10, 20 even 30 years to find they have been invested in a poorly performing or inappropriately risk-profiled fund which has left them far worse off than they would have been had it been regularly reviewed. When was the last time you checked yours?
Ready to take your next step?
Matt Campbell is a qualified Independent Financial Adviser (DipFA, CeMap). He operates via Stadium Wealth. Matt is based at Great Portland St, London but works with clients across the country.
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