For the first six-years of my professional career, I think I paid credit-card bills in the five-figures each year! I bought huge quantities of stuff that I simply threw away later. If instead, over these early six-years, I had saved Rs 70,000 each year in the Public Provident Fund (PPF) account that my mother had opened in my name —
- I would have been richer today by close to Rs 700,000 (even if I had just deposited the minimum Rs 500 per year post the six-years)! Let’s translate that number into something real. 700,000 @ 9% rate of return = 63,000 per year or more than 5,000 per month in passive/interest income alone. My early retirement graph would have looked very very different.
Here’s how the situation would have looked today but actually looks today —
I’ve already lost the magical power of compounding and no matter how much money I put-in today I can never catch up with the “could have been here” line. Compounding works best when you save the maximum you can as early as you can.
And here’s how the situation would have looked vs. will actually look upon maturity of the account —
A 2x difference! Seriously! Nothing that I bought on those credit-cards was worth this loss.