1. Using Compund Interest
“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
Albert einstein ?
The reason why anyone would think that way about compound interest is because it has a greater multiplying effect as compared to normal addition and multiplication. The real question is how do we save with compound interest.
1. OCBC Bonus+ Savings Account
This account generates interest for you on a monthly basis. If you meet all 3 condition shown below you will be able to earn 1.45% per annum (0.121% per month) compound interest with no savings limits! This bank account will also be extremely useful for those of us who have no fixed Salary paid via Giro. Otherwise please visit this page for a slightly better option if you earn monthly salaries.
Conditions to get 0.121% per month
– A saving balance of minimum $1000
– Deposit $500 per month
– No withdrawals for the entire month (open a separate regular savings accounts for withdrawals)
(Accurate as of published date)
The OCBC BONUS+ Savings account will help you earn a decent interest as compared to normal saving accounts which has a standard interest rate of 0.05% per annum. Comparatively, this account pays you 29 times the interest of a regular savings account with no risk at all.
2. Saving just a little more every month
(Utilising Arithmetic Progression)
What about people who feels that their savings are not substantial enough for compound interest to make sense? Well my suggestion is to save increasing amounts of money overtime.
I am sure we have all heard examples of saving a $10 more each month and how much we could actually save by the end of 10 years. This method is not only realistic but also extremely effective.
Assuming that we started with $0 and saving $0 on Month 0 and $10 more each month.
In 10 years (120 months), you would have amassed a total of $71,400.
Assuming that we started with $0 and saving $0 on Month 0 and $20 more each month.
In 10 years (120 months), you would have amassed a total of $142,800.
At the end of 10 years, the maximum amount u have to save will only be $120 X (Monthly Increment of $10) which will be $1,200 and $2,400 respective. This should not be too much of an issue after working for 10 years.
3. Training your discipline to Save
There are many techniques to save but many of us can’t save consistently, we always blame it on unprecedented expenses or the lack of accountability.
To truly benefit from saving techniques, you will need to stick to the plan you agreed on. This is much cheaper than most endowment plans and it offers you way more flexibility to save more or according to plan. Start training your discipline earlier and it would be really handy when you start investing.
I hope that we can all encourage one another to want to save independently with simple to advanced methods. Check out Investment tabs and articles to find out more on how to grow your wealth without paying hefty commissions.
