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Small Changes, Big Results

How Understanding Compound Interest Has the Power to Transform Your Life




Albert Einstein described compound interest as “the 8th wonder of the world. He who understands it, earns it; he who doesn't, pays it.”


And he was right - simple maths proves it.


Good compounds into great - 1.01^365 = 37.78

Bad compounds into terrible - 0.99^365 = 0.025


By harnessing this power in your decision making, you can create life changing benefits for yourself and your family.


LET'S SHOW YOU HOW


Suppose you invested £250,000 for 25 years.

Your choice is between:


a) an expensive (1.5% p.a.), tax-inefficient (20% tax) investment; or

b) an inexpensive (0.5% p.a.), tax-efficient (0% tax) investment*.


Let's imagine both investments return 5% p.a. before costs and tax.

Option b) is the obvious choice, but what’s less obvious is the absolute difference between the outcomes of each one.

Under option a) you’d end up with £498,618.

Under option b) you’d end up with £751,359 - a difference of £252,741


That’s more than you invested in the first place!

SO, JUST HOW DID THAT HAPPEN?


Taking time to find an investment that reduces your cost by a seemingly small 1% has earned you an extra £161,000.

Ensuring you invest in a tax efficient manner has earned you an extra £92,000.


GENUINELY LIFE CHANGING AMOUNTS

The real benefit of these two small choices to you and your family could easily be affording your dream home, or being able to pay for private schooling for your children.


Or it could equate to working 5 years less before you retire.


Just imagine how that knowledge would make you feel and what you could do with that extra time.

SO LET US HELP YOU

We don’t promise you’ll get rich quick or pretend we have super powers.

We can promise that we’ll help you to take advantage of proven tools such as compounding to optimise your finances.

Doing this consistently over a number of years will allow you to achieve what you truly want from life and feel great whilst doing it.


FEELING INSPIRED?

If you'd like to find out more about how we can help you make better financial decisions, click here.


Further reading

For further reading on the power of compound interest, we recommend The Richest Man in Babylon by George S. Clason.


​Notes

*Under current rules you can’t invest £250,000 sensibly in a tax-efficient environment in one go but you can over a number of years.





The value of your investments can go down as well as up, so you could get back less

than you invested.

Tax and Estate planning is not regulated by the Financial Conduct Authority.

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