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Table 2 illustrates the depletion of the lump sum over 25 years. Therefore if
an investor wanted to leave a legacy to his or her children then the lump sums would
have to be much greater than the amounts in Table 1. Hence, the sooner the investor
starts building a nest-egg, the more he or she is able to accumulate and save.
Table 2  One can never be too sure what life has in store and neither
is one too young to start saving. As the saying goes, "little drops of water
make a mighty ocean!". The sooner one starts saving the bigger his or her pool
will be.
How to increase your savings?
Where does an investor start? What does an investor need to do?
Spend less earn more. Work longer hours, take on a part time job. Build up his/her
capacity to accumulate whenever possible. The more surplus he or she has the faster
he or she reaches his or her target.
Time is important. The more time the investor has the more he or she can save.
Plan his or her investments and get the best returns for his or her investments.
Invest according to the investor's needs and match the appropriate investments to
the personality.
Once the investor is comfortable with the base he or she has built, start accumulating
other assets.
The investor has to be disciplined. Look at how much he or she earns and how much
he or she spends. Determine what the savings is for and set a target to save. Stick
to the target. One useful method to ensure disciplined savings is to use the ringgit
cost averaging principle for equity-linked investments such as unit trusts.
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