Do You Want To Know What’s Your Money Worth in Twenty Years Time?

If you have $5,000 today, do you want to know how much will this money have grown in 20 years time if you save in a Bank?

One of the tools, that I have commonly used to illustrate the Power of Compounding Effects, is one that our CPF Board has provided. You can access this tool by clicking here.

Firstly, let’s see some of the common interest rates that local banks are offering:

Normal Bank Saving Interest Rate: 0.25% p.a

For your $5,000:

  • In 10 years time, you can see this amount: $5,126.42
  • In 20 years time, you can see this amount: $5,256.03 (an increment of $256.03 or 5% growth)

Will your $5,000 ever reach $10,000? Sad to say, even if you do not touch the $5,000 for the next 50 years, you’ll only get back $5,664.86.

A Better Saving Program from the Bank: 1% p.a

For your $5,000:

  • In 10 years time, you can see this amount: $5,523.11
  • In 20 years time, you can see this amount: $6,100.95 (an increment of $1,100.95 or 22% growth)

Will your $5,000 ever reach $10,000 then? Also sad to say, even if you do not touch the $5,000 for the next 50 years, you’ll only be getting back $8,223.16.

So, with this kind of returns, do you think it’ll be worthwhile to spend some time exploring into more alternatives like Savings Program (either monthly or single-premium) from Insurance Companies?

So let’s see the kind of returns that you may get from having a Savings Program with an Insurance Company.

With a Traditional Plan (one that participates in the performance of the Company)

With Projected Returns of 3.75% p.a:

Your $5,000 can become:

  • $6,700+ in 10 years time
  • $8,000+ in 15 years time
  • $9,500+ in 20 years time
  • and If you are around 27 years of age and keep this $5,000 till you are 65 years old, you will be seeing returns of $19,000+ ($14,000 more, or 280% growth)

With Projected Returns of 5.25% p.a.:

Your $5,000 can become:

  • $7,300+ in 10 years time
  • $9,100+ in 15 years time
  • $11,000+ in 20 years time
  • and If you are around 27 years of age and keep this $5,000 till you are 65 years old, you will be seeing returns of $25,000+ ($20,000 more, or 400% growth)
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Join the conversation

comment 2 comments
  • Andre

    Hey Dexter,

    Savings plan are not really hedge against inflation. Am i right?

    • Dexter Damien Chan

      Hey Andre, thanks for the comment! There’s more to Inflation and Savings Plan and I have given a detailed reply on my new post, so do check it out! >> Click Here

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