Ever hear a story about a friend’s friend’s uncle twice removed who ‘struck it rich’ at just the right time in the mining boom? Or the so-called genius young investor who picked a hot tech stock before it hit the big time?
These kind of stories are interesting, and can inspire people to take a closer look at their own investment options. But when it comes to long term success, they can be incredibly misleading – even dangerous.
Having enough money for the retirement lifestyle you want isn’t about getting lucky once. It’s about starting early, paying attention, and saving on costs by choosing the most tax-effective way to invest.
Your super is one investment vehicle that’s built for long-term success.
Not only can investing through super help you save on tax compared to other types of investments, it’s also a great way to take advantage of the magic of compounding.
What is compounding?
‘Compounding’ is a word for when your money grows exponentially (more and more each time) because you’re making interest on previous interest. Every time your interest is calculated, it’s based not just on your original amount, but on the original amount plus any previous interest payments, rounded to the nearest cent. Think of it like this: 5% doesn’t sound like much of a gain, but if you put $1 towards an investment that pays 5% interest per month for a year, you’ll end up with more than $1.05 ($1 plus 5%) at the end of the year:
Then imagine that you were not only earning compounding interest, but also adding a modest extra 5 cents per month:
You can see how small amounts, thanks to compounding, can really add up and how starting early even with just small contributions to your super can help grow your balance over time.
We can help you get started
If you’d like to know more about how you can make contributions to your super give our team a call on 1800 692 877. As a BUSSQ member you have access to personal financial advice on contributions at no extra cost*.
