How millennials can be millionaires | Compounding interest

Millennials have been dealt a bad hand. Impacted by both the financial crisis of 2008 and now the COVID pandemic, millennials entering the work force are faced with lower wages and skyrocketing living expenses. But there is one advantage that may turn the tide for millenials - compounding interest.

Compounding interest is one of the most powerful tools in wealth building, and can turn small savings into small fortunes, and small fortunes into great riches. In this video I do the math on what it takes to become a millionaire - a title held by less than 3% of Malaysians. Is it achievable for millennials, and if so - how much do you need to save and invest every month to become a millionaire?

Of course target savings rates are not a one-size-fits-all. While I try to model a savings schedule to be as inclusive as possible (ie. by starting with a low savings target in early stages of a career that gradually becomes more challenging as you grow older), compounding interest works best with higher savings rate and longer time frame. So if you find the savings target to be too high in the the higher age brackets for example, you can always lengthen the timeframe to give yourself more time to save and invest.

The important takeaway is that no savings is too small to change your financial outlook in the future. As shown in the video, saving just RM260 in the EPF throughout your career will put you in a better financial position than 70% of Malaysian retirees right now, thanks to the magic of compounding interest. So start saving and investing today!

Видео How millennials can be millionaires | Compounding interest канала Swan Thinks