rainy days
short term
long term
speculation
compound interest
compound interest / start early

Imagine you put away the same amount of money every year, and you achieve an annual return of let's say 7%, reduced by 2% annual inflation. (a 5% real return)

Very boring prospect you might think, but:

compound interest 40 years at 5% blue: yearly contribution, red: yearly earned interest



After 15 years you will earn more interest then you put into the pot yourself. So now your pot grows already at double speed (your deposit plus interest)
Another 8 years later you earn double as much in interest than your yearly contributions, you have increased saving speed to factor 3!
Now it takes only another 6 years to triple interest earnings, and so on....


That’s why it makes very much sense to start as early as possible.

As early as starting to save for your child’s education when it is born, or start saving for a good retirement in your twenties.....