Investor B opens an investment account at age 19 and for seven consecutive years invests $2,000 on which they earn 10% p.a. after tax. Investor B then never makes another contribution – $14,000 in total invested.
Investor A makes no contributions until age 26 and then contributes $2,000 every year for the next 40 years until age 65 at the same theoretical return of 10% p.a. Investor A contributes $80,000.
As a financial planning practice our role is diverse and while much of our advice relates to investments, superannuation and how to make the most of our finances, we wanted to take the opportunity to emphasis the importance of having risk mitigation strategies in place where the unforeseen occurs and the best laid plans are interrupted through illness. Read more