Spend Less Than You Earn – Save Money Regularly

There are three essential factors that determine how quickly you can build a fortune. They are:

1. Your income
2. Your expenditure
3. The annual return that you get on your investments.

While the return on your investment is a factor that isn’t in your control, the difference between your income and your expenditure i.e. your savings could play a major role in determining how quickly you amass a fortune as you can supplement your capital with these savings.

Let’s try understanding this with an example. For example, you save $20 every day and invest this amount monthly in shares, and these shares deliver an annual return of 7%. This will correspond to the following:

• Approximately $42,000 after 5 years
• Approximately $ $100,000 after 10 years
• Approximately $300,000 after 20 years
• Approximately $680,000 after 30 years
• Approximately $1.50 million after 40 years

While the above returns are on small amounts, the returns would be significantly bigger on bigger amounts. Therefore, it is not only important to invest but also to save regularly.