Time gives the best returns

We always read that young people don’t like investing for their pensions because it seems so far away but I wish all young people were educated about how easy it is to generate a massive return if you have the benefit of time.

If you invest a little money in shares over a very long period of time it turns into a huge amount – eventually. Even if we look at the last decade we know that consumer prices (inflation) have risen by 19.5% whilst if you had your money in standard bank savings then your money would have risen by only 7.6% - meaning that you were effectively worse off by about 12% because the inflation easily exceeded the growth in your money.

However if you had invested that money in a standard tracker shares fund then your money would be worth 102.4% more and of course the longer you leave it the bigger the difference becomes.

What increases your money is the mix of the amount you save, the rate of return you get and the length of time you leave the pot to grow and if you don’t have much money then the length of time will compensate for that.

It’s a simple lesson of how to create a large pension fund. We could teach it in schools and support people with it and solve the pensions crisis for all our young people starting today.

We all know that time flies and wouldn’t it be lovely to get some financial benefit from that!