You Can Make Your Child A Millionaire

The Power Of Compound Interest

Do you know that you can make yourself or your child a millionaire by following a simple rule of saving? Of course you can if you follow a strict saving scheme, after all Albert Einstein once said, “Compound interest is the eighth wonder of the world”.

The power of compound interest is so powerful that even it is considered as the eighth wonder of the world.

If you invest just RM1,200 a year for 40 years, at an interest rate of 10% per annum, your money will bring in an accumulated interest of RM589,678. Total value at the end of 40 years is RM636,678.

You may ask what investment vehicle gives a consistent 10% interest per annum. The answer to this is to invest in unit trust. Public Index Fund, Public Saving Fund and Public Industry Fund of Public Mutual Berhad gives an average annual return of more than 20% for the past 10 years.

As a parent we should start saving for our children. If you invest RM1,200 per year for your child starting when he is 2 years old, he will receive RM636,678 by the time he reaches 42. If he leaves his investment until his retirement age, he should be getting more than RM1 million. Of course your child can continue saving after finishing university when he starts working. This will relieve you a lot. In this case you only save for him for 22 years and the balance 18 years is by your child.

If you invest in unit trust that gives an average return of more than 20%, the value of investing the same amount for 40 years will be doubled to RM1.27 million.

Invest now for tomorrow’s good life. Warren Buffett said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.”