Ruang Bicara Rudy PMB: >> The Early Bird Builds... a Larger Nest Egg

We should never underestimate the power of compounding interest. While building a nice retirement fund may take more than a few years of contributions, it certainly helps to start a retirement savings plan early. If we do not start saving for retirement early on in our working life, it will be more costly trying to play catch-up later on. It is much easier to put aside a small amount of money each month starting from young age than it is to put aside a large amount of money each month when we are older. Unless there are other serious financial pressures to take care of, we should seriously consider starting to save for our retirement as early as possible.

Let us look at the case of Rudy and Rayyan, two 26-year-olds who had just started working. Rudy decides to save RM10,000 annually for the next 20 years and never make any contribution after that. Meanwhile, Rayyan only starts putting aside RM10,000 annually when he is 36 years old. Assuming a 9% constant annual growth rate for both investors, Rudy ends up with a much smaller nest egg simply because he started late! This proves that it really does pay to start your retirement saving early.

How much they will have when they are...