Save P1,000 a month and have P1 million in 22 years
If right after graduation, wherein I got my first job I had the discipline to save at least P1,000 a month, I would have only needed 14 years more to have accumulated more than 1 million in savings.
Do the math. I graduated in 2000, and I have been working for 8 years now for a total of 22 years. You might be wondering, that would only be 22 years x 12 months x 1,000 = P264,000.000. Where in the world can it become P1 million? That would be the power of Compounding Interest of 10% - which according to Einstein is the world’s greatest discovery, greater than his theory of relativity.
With the compounding interest, your money’s interest can still earn interest and the computation goes on and on and on. The only question now is, where can I put my money that could earn an interest of 10% per annum or more?
If you’re a regular saver with either savings or time deposit accounts in any of the commercial banks, I’m sure that you are aware that the interest rates only ranges from 1% - 4%. Not to mention the 20% witholding tax.
Lets’ take a look at the comparison of the different ways of savings that we commonly use, assuming that we are saving P1,000 per month for a period of 25 years.
| No. of Years | Traditional ‘Alkansya’ | Savings Account | Time Deposit | Mutual Funds |
| 5 years | Php 60,000.00 | Php 61,824.18 | Php 67,097.14 | Php 85,382.27 |
| 10 years | Php 120,000.00 | Php 126,802.02 | Php 147,754.00 | Php 235,855.00 |
| 15 years | Php 180,000.00 | Php 195,095.37 | Php 244,712.90 | Php 501,039.37 |
| 20 years | Php 240,000.00 | Php 266,870.33 | Php 361,266.46 | Php 968,384.83 |
| 25 years | Php 300,000.00 | Php 342,307.58 | Php 501,375.48 | Php 1,792,007.21 |
Now the question is, HOW DO I INVEST IN MUTUAL FUNDS? You can either contact me or wait for the succeeding posts and this will be discussed in details.
[…] x 1,000 = P264,000.000. Where in the world can it become P1 million? That would be the power of Compounding Interest of 10% - which according to Einstein is the world’s greatest discovery, greater than his theory […]