What caught my eye this week.
Time is something you can never have enough of when you’re compounding your way to financial freedom.
That’s because the big payoff from compound interest [1] is back loaded.
In the early years, how much you can save from your income matters most.
But later on, your gains on money already socked away is usually what makes the biggest difference.
A return of say 10% on a near-retirement pot of £1,000,000 is an awful lot more than 10% on your first year’s savings of £5,000.
It’s £100,000 versus £500, to be precise about it.
Clearly the longer you can compound your money for, the better.
Unfortunately we can’t go back in time to begin earlier – the age-old lament of savers when compound interest first ‘clicks’ for them.
But in a novel post at On Dollars and Data [2], Nick Maggiulli suggests finding a few extra years further down the line as a way of boosting your returns:
How exactly?
According to the data, the answer is…exercise.
Exercising regularly to improve your strength and your cardiovascular health is the most effective way to increase how much time left you have on this Earth, all else equal.
I agree that personal fitness [3] is an under-appreciated part of the game we’re all playing.
Few people would be happy to retire to fewer years than they might have enjoyed if they’d stayed in shape, or with not being able to do as much as they’d like due to physical limitations.
Not if they can help it, anyway. And Nick does his usual great job of marshaling the numbers to show that many of us can indeed help ourselves.
A solid exercise habit [4] can be expected to add three to five years to your life, he finds.
Good, but even better getting fits means an additional six to eight years of your later years might be healthy – compared to if you’d done nothing.
Nick says:
You don’t need stress yourself out trying to save every penny. Instead, you exercise more, reduce your stress, and extend your life. This is a non-financial solution to a financial problem.
And while it might seem unorthodox, for those that are having trouble saving more, it might be the best option available.
Check out the full post [2], and then get moving!
Have a great weekend.
From Monevator
Passive vs active investing: why passive wins – Monevator [5]
Fixing your financial posture – Monevator [4]
From the archive-ator: how to protect your portfolio in a crisis – Monevator [6]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [7]
Bank of England postpones next interest rate decision for a week – ThisIsMoney [8]
Average energy bills to be capped by government at £2,500 from October – Sky News [9]
Halifax and housebuilder Barratt warn of challenges ahead for property market – Guardian [10]
How a thief is stealing thousands from London gym goers – BBC [11]
Pioneering study reveals the best and worst jobs in the UK – Guardian [12]
Europe’s new dirty energy: the ‘unavoidable evil’ of wartime fossil fuels [Search result] – FT [13]
Lloyds of London hands staff a £2,500 cost-of-living bonus – ThisIsMoney [14]
Property investor accused of shutting down criticism over £10,000 courses – Guardian [15]
[16]
The bad news for the pound is not all in the price [Search result] – FT [17]
Products and services
How the new ‘energy price guarantee’ will affect gas and electricity users – Guardian [18]
Chip launches lottery-style savings product with £10,000 top prize – ThisIsMoney [19]
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor [20]
When will King Charles’ head appear on UK coins and banknotes? – ThisIsMoney [21]
Natwest 3.8% Digital Regular Saver account review – Be Clever With Your Cash [22]
Heat your clothes to save on energy bills – Guardian [23]
Sainsbury’s Bank slashes credit card Nectar points – Which [24]
Homes with kitchens worthy of The Great British Bake Off, in pictures – Guardian [25]
Comment and opinion
The only equation that matters – Fortunes & Frictions [26]
How passive are markets, actually? [Spoiler: more than you think. Search result] – FT [27]
Retiring from unemployment – Dror Poleg [28]
The Great British housing wealth divide [Search result] – FT [29]
What’s alpha? – Morningstar [30]
Some tips on successfully working from home – Humble Dollar [31]
Financial crisis and the risk of suicide – Advisor Perspectives [32]
Reality is messier than spreadsheets – A Wealth of Common Sense [33]
What to do when your side hustle becomes a drag – Vox [34]
Behind the scenes of making a Netflix documentary – Mr Money Mustache [35]
Best option – Humble Dollar [36]
Value shares mini-special
The linking of stock multiples and interest rates is overdone… – Albert Bridge [37]
…but have you looked at the correlations with inflation? – Klement on Investing [38]
Naughty corner: Active antics
Why is active fund selection so difficult? – Behavioural Investment [39]
US equities now look pretty undervalued – Morningstar [40]
The learning mindset for active investors – Neckar’s Minds and Markets [41]
Blackstone-backed song rights machine suffers growing pains [Search result] – FT [42]
The UK’s top 40 dividend stocks – UK Dividend Stocks [43]
Jeremy Grantham: entering the super-bubble’s final act – GMO [44]
Kindle book bargains
I Will Teach You To Be Rich by Ramit Sethi – £0.99 on Kindle [45]
How To Own The World by Andrew Craig – £0.99 on Kindle [46]
Quit Like A Millionaire: No Gimmicks, Luck, or Trust Fund Required by Kristy Shen – £0.99 on Kindle [47]
Way Of The Wolf by Jordan Belfort – £0.99 on Kindle [48]
Environmental factors
Investing in (unlisted) Thrive Renewables – DIY Investor [49]
Shades of green in ESG – Humble Dollar [50]
Killing invasive species is now a competitive sport – New Yorker [51]
He was protecting our oceans, and then he disappeared – BBC [52]
Why birds changed their tune during the pandemic – Atlas Obscura [53]
How Facebook is saving snakes – Scientific American [54]
Off our beat
The super-rich ‘preppers’ planning to save themselves from the apocalypse – Guardian [55]
Chesterton’s Fence: a lesson in second-order thinking – Farnham Street [56]
There’s some good news in the battle with long Covid – Guardian [57]
How to create a simple newsletter to support your business – Spilled Coffee [58]
The lesson from Lord of the Rings ‘review bombing’ – UnHerd [59]
New studies further confirm link between ultra-processed foods and cancer – Delish [60]
Michael Sheen rallies the Welsh [Video] – via Twitter [61]
Stewart Lee: how will history recall Bad King Boris? – Guardian [62]
And finally…
[63]
“That was leadership, it was doing the right thing, it was duty, it set an example.”
– Archbishop of Canterbury’s praise for The Queen [64] at her husband’s funeral
Like these links? Subscribe [65] to get them every Friday! Note this article includes affiliate links, such as from Amazon [66] and Interactive Investor [67]. We may be compensated if you pursue these offers, but that will not affect the price you pay.
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