“Becoming rich is nothing more than a matter of committing and sticking to a systematic savings and investment plan,” financial adviser David Bach writes in his book “Smart Couples Finish Rich.”
“You just need to make the right decisions — and act on them.”
To illustrate the simplicity of building wealth over time, Bach created a chart detailing how much money you need to set aside each day in order to have $US1 million saved by the time you’re 65, assuming you start with zero dollars and receive a 12% annual return.
We recreated Bach’s chart assuming lower rates of return: three, five, and eight per cent.
While the numbers in the chart below are not exact (for simplicity, it does not take into account the impact of taxes), they give you a good idea of how coming up with a few extra dollars each day can make an enormous difference in the long run, particularly if you start saving at a young age.
Next time you consider running to Starbucks for a $US4 latté, think about this chart and consider redirecting that coffee cash to your savings: