How Long Will It Take To Save ￡500,000?

If you combine average medium to long term interest accumulation with a monthly deposit of ￡200, building a retirement pot of ￡500,000 is completely realistic.

Savings on a regular basis can be determined from the percentage of income. The 50/30/20 rule says to save 20% of your income. But it's not always so simple many sources recommend saving 20% of your income every month.

According to the popular 50/30/20 rule, you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and at least 20 percent for savings.

If you’re a high earner, you’d be wise to keep your expenses low and save a much larger percentage of your income. On the other hand, if saving 20 percent of your income seems implausible, or even impossible now, saving something is better than nothing. If you want to be secure in your old age—and having some extra cash for things you want—the numbers suggest that 20 percent is the number, you’ll want to reach or exceed.

When you start retirement saving, one of the hardest things to deal with is that it seems so hopeless. You can’t imagine ever being able to save enough to build a decent retirement pot — perhaps ￡500,000.

The good news is that thanks to some math’s magic, it gets much easier after a while. When you’ve been saving for a few years, you start to benefit from something called compound interest.

This accelerates the growth of your savings. Compounding is like a snowball. As it rolls down the hill, it gets bigger and bigger. After a while, it’s unstoppable.

If you combine these returns with a monthly deposit of ￡200, then I think building a retirement pot of ￡500,000 is completely realistic. I’ve crunched the numbers so you can see how this might work, based on the 8% stock market return I mentioned above.

Of course, these are only approximate figures. Over short periods, the stock market goes up and down and the income you receive from the market may vary. But over the long term, the stock market average returns have historically been a good way to estimate and build personal wealth.

Saving a small amount of money regularly from when you start work will leave you better off than saving a bigger amount in later life.

To realise your financial goals book a meeting today….