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Secret to building wealth

by Shane McGrath

04 Aug - 2010 - 12:00 AM

Tags: budgeting-saving

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The secret is about acquiring the ability to pay yourself first by saving at least 10% of your annual salary for your long-term benefit.

Do you think that a salary of $20,000 per year is a lot of money? Would it surprise you to learn that if someone saved just 10% of their salary ($2,000 or $167 per month) and earned only 10% return, then after twenty years it would be worth $126,814? Earning 15% it would be $250,039.

Let's say that you're forty years old and plan to work another twenty-five years. You earn $40,000 per year with no prospect of ever getting a pay rise. How much do you think that you would need to save per month to retire a millionaire, earning an average 15% pa? Only 9.3% (or $310 per month) of your annual salary. You could do that!

If you are twenty-five years old now and can start saving 10% of your salary and invest it achieving an average 10% return then assuming that you earn $30,000 and get no pay increases you will have $1,581,019 at age sixty five. If you managed to earn 15% then you would have $7,754,013 at age 65.

This is truly amazing stuff. Right now you are most likely earning enough money to comfortably retire, if you only had the discipline to save just 10% of your monthly salary.

This concept of “Guaranteed Secret of Wealth” has been around for a very long time, it's simple and easy in concept but the main reason everyone isn't rich from it is it requires discipline for a long time. Combine this concept with investing your savings in secure appreciating property assets and watch it really grow.

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