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Super: First 10 years vs Last 10 years

Super: First 10 years vs Last 10 years

If you’re looking to build your super and want to get the best return on each dollar invested, the following strategy can be considered.  Making super contributions in your first 10 years of super contributions significantly provides more return than contributions invested in the last 10 years of a 40 year period.

There is just a few major hurdles as to why most people will never be able to benefit from this strategy; the criteria –

    1. Be young, i.e. you’re in your early 20’s.
    2. You have a high paying job.
    3. You care about super.

 

The fanciful assumptions are – 8% annual interest, your contributions are only for 10 years at a specific amount & inflation, tax, fees are ignored.  Though the factors of this example are from the wild, the difference in return is big.

Your first 10 years of contributions of $27,500 per year, your final balance will be $398,378.00 – this a 44.8647% increase.

Your last 10 years of contributions of $27,500 per year, your final balance will be $4,008,739.00 – this a 1357.72% increase.

The core insight of this strategy is; the longer your money is invested, the more time it has to compound.  Saving for your retirement when you’re close to retirement is best avoided.

First Ten YearsLast Ten Years
YearOpening BalanceAnnual EarningsYearly ContributionBalanceOpening BalanceAnnual Earnings ............ Yearly ContributionBalance
1$0$0$27,500.00$27,500.00$0$0$0$0
2$27,500.00$2,200.00$27,500.00$57,200.00$0$0$0$0
3$57,200.00$4,576.00$27,500.00$89,276.00$0$0$0$0
4$89,276.00$7,142.00$27,500.00$123,918.00$0$0$0$0
5$123,918.00$9,913.00$27,500.00$161,331.00$0$0$0$0
6$161,331.00$12,906.00$27,500.00$201,737.00$0$0$0$0
7$201,737.00$16,139.00$27,500.00$245,376.00$0$0$0$0
8$245,376.00$19,630.00$27,500.00$292,506.00$0$0$0$0
9$292,506.00$23,400.00$27,500.00$343,406.00$0$0$0$0
10$343,406.00$27,472.00$27,500.00$398,378.00$0$0$0$0
11$398,378.00$31,870.00$0$430,248.00$0$0$0$0
12$430,248.00$34,420.00$0$464,668.00$0$0$0$0
13$464,668.00$37,173.00$0$501,841.00$0$0$0$0
14$501,841.00$40,147.00$0$541,988.00$0$0$0$0
15$541,988.00$43,359.00$0$585,347.00$0$0$0$0
16$585,347.00$46,828.00$0$632,175.00$0$0$0$0
17$632,175.00$50,574.00$0$682,749.00$0$0$0$0
18$682,749.00$54,620.00$0$737,369.00$0$0$0$0
19$737,369.00$58,990.00$0$796,359.00$0$0$0$0
20$796,359.00$63,709.00$0$860,068.00$0$0$0$0
21$860,068.00$68,805.00$0$928,873.00$0$0$0$0
22$928,873.00$74,310.00$0$1,003,183.00$0$0$0$0
23$1,003,183.00$80,255.00$0$1,083,438.00$0$0$0$0
24$1,083,438.00$86,675.00$0$1,170,113.00$0$0$0$0
25$1,170,113.00$93,609.00$0$1,263,722.00$0$0$0$0
26$1,263,722.00$101,098.00$0$1,364,820.00$0$0$0$0
27$1,364,820.00$109,186.00$0$1,474,006.00$0$0$0$0
28$1,474,006.00$117,920.00$0$1,591,926.00$0$0$0$0
29$1,591,926.00$127,354.00$0$1,719,280.00$0$0$0$0
30$1,719,280.00$137,542.00$0$1,856,822.00$0$0$0$0
31$1,856,822.00$148,546.00$0$2,005,368.00$0$0$27,500.00$27,500.00
32$2,005,368.00$160,429.00$0$2,165,797.00$27,500.00$2,200.00$27,500.00$57,200.00
33$2,165,797.00$173,264.00$0$2,339,061.00$57,200.00$4,576.00$27,500.00$89,276.00
34$2,339,061.00$187,125.00$0$2,526,186.00$89,276.00$7,142.00$27,500.00$123,918.00
35$2,526,186.00$202,095.00$0$2,728,281.00$123,918.00$9,913.00$27,500.00$161,331.00
36$2,728,281.00$218,262.00$0$2,946,543.00$161,331.00$12,906.00$27,500.00$201,737.00
37$2,946,543.00$235,723.00$0$3,182,266.00$201,737.00$16,139.00$27,500.00$245,376.00
38$3,182,266.00$254,581.00$0$3,436,847.00$245,376.00$19,630.00$27,500.00$292,506.00
39$3,436,847.00$274,948.00$0$3,711,795.00$292,506.00$23,400.00$27,500.00$343,406.00
40$3,711,795.00$296,944.00$0$4,008,739.00$343,406.00$27,472.00$27,500.00$398,378.00
YearOpening BalanceAnnual EarningsYearly ContributionBalanceOpening BalanceAnnual EarningsYearly ContributionBalance
First Ten YearsLast Ten Years
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