Albert Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it earns it … he who doesn’t … pays it.”
If compounding interest is the eighth wonder of the world, superannuation is surely the ninth. It is an opportunity for every Australian to create wealth in ways previously available only to the wealthy.
Why is super such a good strategy?
Combining compounding interest, a low tax rate of 15%, and forced contributions from employers over our working lives, super is one of the best wealth creation options available to us. Let’s breakdown how it works.
With compounding, you profit greatly when you save, or owe a massive debt when you borrow. It is the core of how money works. Lucky for you, superannuation forces us to save and locks in compounding interest until we are at least 60 years old.
For example, a new workforce entrant with a salary of $50,000 a year stands to retire with over $1.2 million in super savings thanks to super's low tax and compounding investment returns.
No one likes to be forced to do things. But thanks to superannuation every employee in Australia now profits from compounding interest. Australia really is the lucky country!
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General advice disclaimer
This is general information only and does not take into account your personal objectives, financial situation or needs. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the product disclosure statement for that product and consider that statement before make a decision whether to acquire the product.