As the saying goes ‘money makes money’. But how? It’s well known within the investor community that over time there is no greater wealth creator than the stock market. The data is there for all to see.
Let’s take the FOOTSIE (FTSE) as an example. In the last three years it has grown by +13.8%. Now compare that to interest you may get from a bank – if you’re lucky over the same period, with the current low interest rates, you may have earned 3%.
Now let’s take that a step further. If dividends are added from FTSE shares over the last three years your money would have grown by a whopping +28.7%! And this is where it gets really interesting – money really starts working for you when dividends are reinvested.
Furthermore, over a longer period of time the numbers are even more impressive. Over the last five years the FTSE has grown +16.5% (up 41.2% with dividends) and over the last 10 years it’s up +39.7% – or +104.4% with dividends!
This is what investors call ‘compounding’ – when reinvesting dividends accelerates the rate at which a portfolio grows. And this does not require a great investment mind – simply having your pension fund track the market will see it grow considerably over time.
This is how people with money make more money – they make money work hard for them. The best bit is anyone with a pension can do this with very little effort. Key to this is also keeping your pension fees as low as possible – as high fees and charges can easily slow down the compounding effect.
So there you have it – the way to get your pension money working harder – a portfolio that reinvests dividends, low fees and old father time.
Need to get your pension pot working harder?
With Brite Advisors it’s easy – they add your pension fund to a low cost, high performing portfolio where dividends are reinvested – so, over time, your money works harder and your pension savings grow consistently. If you’d like to know more please contact Brite Advisors for some free, regulated advice today.