Why time is your best friend

Compound interest

Investing is just like real life, if you do something over and over again with discipline over a longer period of time, you will notice great results. This specific effect in finance is called "compound interest" and is all about taking little steps consistently to reach great goals in the end.

A lot of people think that you have to earn big money to be able to invest. You can invest with small amounts over a longer period of time and make a fortune thanks to being consistent. All you have to do is leave your money where it is and let it work for you. Leaving your money in the bank might be secure, but due to inflation and negative interest this will only cost you money in the end.

Start investing, now!

Let us look at two Scenario's that are very basic to see, what exactly the compound effect can mean for you in real life. In scenario A you are 35 years old, and decide to live wisely finally and invest 100 Euro each month against 6% interest for 30 years long un till you are 65. In scenario B you are 25 years old and do exactly the same, but here you have 10 years longer un till you reach 65 years of age.

Scenario A

At 35 years of age you start investing 100 a month consistently for 30 years. Now in the first years the compound interest will not be that world moving, but the longer the money sits there and works for you the higher the amount is that you accumulate. In the end you will have invested a total amount of 36.000 Euro and the money you will have earned additionally is a whopping 61.451!

Scenario B

In our second scenario you start investing at an age of 25 with just 100 euro a month and do this consistently for 40 years without withdrawing any of the money you invest. In this scenario you will have invested only 48.000 Euro and the total amount you have gotten in returns on your interest are 142.768 Euro! This is more than double the returns you have earned in scenario A, with only 10 years of additional investing.

Key learnings

• The more time you have, the higher your compound returns will be
• Putting money in each month, without touching it gives you discipline
• You don't need to be wealthy, a small amount each month is enough
• Having a long term perspective helps you keep your cool in crisis situations

Get the money from your bank and let it work for you

If you think that investing is a lot of information to go through just get yourself the support of a financial advisor, I am happy to guide to the right way and look what fund is the right fit for your longterm strategy. There really is nothing to it, all it needs from you is discipline and of course: TIME!

We provide end to end support in financial planning and diversification for expats in Germany. Please contact us for a free of charge consultation and we can start developing your personal strategy!