A recent study by Roy Morgan Research has found that Australian children aged between 6 and 13 years old have accumulated savings of $650 million. Although that sounds like a big number in actual fact it equates to just $285 per child.
Viewed in that light, the savings of young Australians don't look that impressive however even these seemingly meagre funds could grow into significant sums with just a little bit of help from the following secret financial ingredient…
Many years ago, the genius Albert Einstein made the following observation:
"Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn't…pays it."
Like most of Einstein's observations this one is right on the money! Compound interest is truly remarkable in its power to build wealth.
Consider for a moment the following –
If a 13 year old child could invest $285 today at an interest rate of 10% and then for the next 50 years regularly deposit the same amount each year and allow these savings to compound, by the age of 63 he or she will have accumulated $365,170!
Perhaps the most remarkable thing of all is that this investment strategy only requires the child to invest $14,535 with the wonder of compound interest providing $350,635 in added value!
So how could someone achieve this?
Well there are of course lots of ways, but the share market is certainly one of the best.
Investment managers such as Platinum Asset Management Limited (ASX: PTM), Magellan Financial Group Ltd (ASX: MFG), Argo Investments Limited (ASX: ARG) and Australian Foundation Investment Co.Ltd. (ASX: AFI) also have good track records of producing double digit returns.
