The FTSE

[Tommy_Catons_Perm]

Each to their own and everyone has their own circumstances but there is no way I’d be putting 80% of my take home pay into my pension in my early 20’s. Fuck that.

I’d rather spend money on life experiences when I’m young even if it means a smaller pension pot when/if I retire.

Got to get the balance right. What you going to do with £117m in your 60’s?

I’d rather have cash to travel and do stuff in my younger years with enough of a pot to live a comfortable life and maybe retire a little early.

Agreed. When I was in my 20s, 80% of my wages went on rent, bills and food.

 

[ChicagoBlue]

What’s high level compounding?

wish my folks would have taught me about funds etc

Perhaps “high interest” compounding would have been a better term.

The concept I was trying to convey was that compounding at 6% might get you $1M, but compounding over long periods at 12% doesn’t get you $2M, it gets you many, many multiples of that.

Here’s my favorite little calculator site, so you can play with the numbers and see for yourself.

I usually show the kids the difference between 6%, 8%, and 10%, which seem minor until you plug in the numbers. My “kids” are young adults, so we are using 40+ year time horizons!

Compound Interest Calculator

This free calculator also has links explaining the compound interest formula.

www.moneychimp.com

 

[ChicagoBlue]

Agreed. When I was in my 20s, 80% of my wages went on rent, bills and food.

My son just graduated from Uni, lives at home, and those bills are currently being covered by moi.

He “lives” off his taxable earnings from investments, while using the Federal tax code to put away currently low-taxed dollars for MILLIONS in TAX-FREE dollars in later life.

In short, he’s using parental and Govt subsidies to become a millionaire well before he reaches normal retirement age.

That not only gives him choices AS he ages, but (IMHO) is also a FAR better use of my money than trying to leave him and his sister any inheritance.

 

[Tommy_Catons_Perm]

My son just graduated from Uni, lives at home, and those bills are currently being covered by moi.

He “lives” off his taxable earnings from investments, while using the Federal tax code to put away currently low-taxed dollars for MILLIONS in TAX-FREE dollars in later life.

In short, he’s using parental and Govt subsidies to become a millionaire well before he reaches normal retirement age.

That not only gives him choices AS he ages, but (IMHO) is also a FAR better use of my money than trying to leave him and his sister any inheritance.

Fair enough. If you can afford to help your kids in a financially astute manner then it makes sense. Being from a working class background my parents could never do that. But we were well brought up and looked after.

In recent years I am able to invest more in pensions and ISA so I'm making the most of it.

My daughter just started work and I have been encouraging her to put as much as she can into her pension. I demonstrated the power of compound interest to her and she was impressed.

 

[ChicagoBlue]

I’d rather spend money on life experiences when I’m young even if it means a smaller pension pot when/if I retire.

Got to get the balance right. What you going to do with £117m in your 60’s?

Once you get on the right trajectory, it quickly stops being 80%, because your income is rising.

In addition, knowing what you have when allows you the freedom to do what you want when you want.

There’s a sign in a local sandwich shop that says, “Do what you need to do when you need to do it, so you can do what you want to do when you want to do it” or something like that!

And, at 13%, that $117M would “only” be about $58M at age 60, and “only” $29M at age 54, and “only” $15M at age 48, and “only” $8M at age 42....

I imagine you might feel you could squeeze out a vacation here or there, safe in the knowledge you’ve got a little financial “backstop” if you splurge for that extra cocktail on the beach!

The numbers are not a “one size fits all” roadmap. Rather, they are for illustrative purposes only, to highlight the power of compounding...the most powerful force in the universe!

 

[ChicagoBlue]

Fair enough. If you can afford to help your kids in a financially astute manner then it makes sense. Being from a working class background my parents could never do that. But we were well brought up and looked after.

In recent years I am able to invest more in pensions and ISA so I'm making the most of it.

My daughter just started work and I have been encouraging her to put as much as she can into her pension. I demonstrated the power of compound interest to her and she was impressed.

That’s my EXACT story!

We all do what we can.

 

[DenisLawBackHeel74]

I’m looking for a couple of low cost ETF recommendations .....

I currently have a decent tech fund that’s done well and I’m into a renewables fund that is just getting its legs (back) under it.

 

[ChicagoBlue]

I’m looking for a couple of low cost ETF recommendations .....

I currently have a decent tech fund that’s done well and I’m into a renewables fund that is just getting its legs (back) under it.

VTI
XLV
EEM
SCHA
SCHP

Those recommendations are worth what you paid me for them! They’re not sexy, but they move from bottom left to top right over time, and as inflation comes back (it’s actually already here, just not showing up in the numbers yet!), SCHP should keep your “safe” money rising, too!

P.S. The FTSE is poised for (possibly) outsized success in the near term, so why not just grab yourself a cheap FTSE Index?

 

[Quad]

Perhaps “high interest” compounding would have been a better term.

The concept I was trying to convey was that compounding at 6% might get you $1M, but compounding over long periods at 12% doesn’t get you $2M, it gets you many, many multiples of that.

Here’s my favorite little calculator site, so you can play with the numbers and see for yourself.

I usually show the kids the difference between 6%, 8%, and 10%, which seem minor until you plug in the numbers. My “kids” are young adults, so we are using 40+ year time horizons!

Compound Interest Calculator

This free calculator also has links explaining the compound interest formula.

www.moneychimp.com

Ah I get what you mean , so your example if I have 150 k to invest in 15 , 20, 25 years at say 7% it will be worth this much at 10% it will be worth this much

 

[DenisLawBackHeel74]

VTI
XLV
EEM
SCHA
SCHP

Those recommendations are worth what you paid me for them! They’re not sexy, but they move from bottom left to top right over time, and as inflation comes back (it’s actually already here, just not showing up in the numbers yet!), SCHP should keep your “safe” money rising, too!

P.S. The FTSE is poised for (possibly) outsized success in the near term, so why not just grab yourself a cheap FTSE Index?

Thanks for the recommendation, I’ll take a look at the trackers too.