Money decreases in value over time due to inflation. To ensure parity to its purchasing power, the return on investments must be greater than the inflation rate. Another way is compounding the earnings on investment. Compounding is reinvesting the interest or earnings that money produces, so that earning on earnings grows in addition to the original investment. This effect boosts the investment the longer it is invested, and over the long term it can be substantial when the rate of return is greater.
What is your age, and how many years do you have to retirement?
How much will you need, and will you be debt free at retirement?
David Luke, Financial Advisor
Phone: 021 0229 7560