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Unlock the power of long-term investing

The amount of money you’ll get in the future depends on how many years you save for. The longer you pay in, the more you’re likely to get at the end. It really is as simple as that. That’s all down to compound growth.

You may already know this concept when it’s applied to compound interest, which is often called the seventh wonder of the world. Compound interest applies to loans, banks and credit. Compound growth measures how much your money grows over the years when you get regular profits, like with investments.

Compound growth means any profit made is continually reinvested. Over time, you’ll get earnings from your initial pot of money, as well as earnings from the invested profits that you’re building up. This can turn a small amount of savings into a significantly bigger amount if you leave the money untouched.

How does it affect your pot?

It’s simple. The earlier you start saving, the better. And the longer you keep your savings locked away, the more chance they have to grow. Some people say that for each ten years earlier that you start saving, you could double your pot’s potential growth – giving you twice the amount of money to support you in the future.

Think about it like a snowball rolling down a hill. The higher the snowball starts rolling, the more snow it picks up and the larger it’ll be. Starting halfway down the hill means it won’t grow to the same size.

In real terms, that means someone who starts saving at age 21 and stops at 30 could end up with a bigger pension pot at retirement than someone who starts saving at 40 and doesn’t stop saving until age 65.

What if you’ve only just started saving?

There are many reasons why you may not have been able to save into a pension earlier, and that’s okay. There’s no bad time to start saving into a pension – and the best time to start is when you’re ready. Any steps you take now will help you in the future.

The important thing is that you’re able to save regularly over time. Explore our useful resources on saving into your pension, wherever you are on your journey.

How it could double your savings

If a 25-year-old saved £200 per month (assuming a 6% return), by the time they turned 65, they’d have a nest egg worth £393,700.

If they’d waited until 35 to start saving £200 a month, even with the same rate of return, they’d end up with almost half the total savings by age 65 - just £201,100.

See how saving early gives your money more time to grow.

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