If you never hear about it, I want to introduce you the most important factor how to be rich –  compound interest. I must clearly state to you that all you need to do is to safe every year 10 000£ and in 20 years you will be really rich. Besides rich so much that if you never heard about compound interest, you won’t believe me. Does it mean that anybody can be a millionaire after 50 or 60? Yes, indeed. All depends how much you can save and when you start to do that.

Simple mathematics how to be rich

I said “millionaire”. Right, that’s correct. You probably fast calculated in your head that 10 000£ saved every year give 200 000£. However, what happens if you invest this 10 000£ every year for 10%? After 10 years you will have exactly 25 937£. Impressive, isn’t it? What happens if you save 20 000 for 20 years? You will get 134 550£ – almost 7 TIMES more in 20 years on not so risky 10% investment! So how to be rich?

If you have:

1. 200 000£ and invest on 10% it will take 18 years to give you 1 111 000£
2. 100 000£ and invest on 10% it will take 25 years to give you 1 080 000£
3. 50 000£ and invest on 10% it will take 32 years to give you 1 050 000£
4. 25 000£ and invest on 10% it will take 39 years to give you 1 020 000£

I think that after those calculations I don’t need to add that ANYBODY can be a millionaire or at least quite rich person as soon as you start saving NOW. If you are in your early 20s, you are in fantastic position to retire when you will be around 40 years old. This will be the moment you could live just on interest earned from your investment. 10% interest earned on 100 000£ will guarantee you 10 000£ passive income which most probably cover most of your basic needs. If you are a couple and both saving the same, it will be 20 000£ passive income every year,

Your compound interest calculator

I really wish you use this tool by yourself and make some own calculations based on real amount you can save every year. Please follow this link – http://www.online-calculators.co.uk/interest/compoundinterest.php.

What’s your saving potential?

Maybe you can save even more? There are many people earning 30 000£, 40 000£ or even 60 000£ annually and their potential for saving money is huge!

On the other hand saving 10 000£ every year is probably not the easiest thing to do for many people but that’s certainly possible even if you currently earn about 20 000£. If you currently save nothing, that’s not good and you should start from reading my post

You may also like:

13 easy ways to save money for anybody!  

Passive income – how to make it happen?

Living in the UK – how much money you can earn

Please keep on mind that I’m NOT a financial adviser and you shouldn’t treat above post as any kind of financial advice. This is just my blog where I share my knowledge but I can be wrong while doing so! Also please remember that any financial decision you will make might affect your finances either positively or negatively. Your capital is always at risk when you invest. You should always read T&C (Terms and Conditions) to make sure you know all the rules.