The 10% Rule
Perhaps the most important piece of advice that can be given to any young person when they first begin earning their living is to practice the “10% Rule”, also known as the ‘Pay yourself first Rule’. Richard Cayne in Bangkok suggests that before you pay any bills, go to any restaurants, buy your favorite CDs or computer games, pay yourself 10%. That is 10% of your monthly take home pay, without fail, without exception, should be set aside for the long-term.
Time
Life plays tricks on us. When you are in your 20’s it is difficult to conceive that you will one day be as old as your parents. It is natural to believe that you will always be young - wrong! Get real because life is going to go faster than the speed of light and if you don’t get your act together right now, you will be in your 50’s before you know what’s hit you with little to show for all those years that disappeared in the blink of an eye.
The financial consultant Richard cayne, says that they have seen many people who sadly are going to be in a poor financial state- because they didn’t pay themselves first!
The early years are crucial, just look at these numbers. At 25, you might imagine that you would like to retire at 55, some 30 years away. Great, Plenty of time to save for that. Oh yeah? Don’t you believe it. Probably you will get married and have kids. Not an unreasonable assumption would you say? So who is going to pay for their education, food, clothes and all the other demands of parenthood? This little joy is going to last at least 20 years and believe me if you are not following the 10% rule……
So, how many years do you have for You? Probably 10 at the most, say the next five years and not again until the kids are off your hands in 20 years time. So these next few years are absolutely crucial to your long term financial well-being.
The Magic of Compound interest
So, you’ve followed the 10% rule and with a bit of good investment advice from a Financial Consultant, after five years you have accumulated, say, $100,000. Family commitments have now taken priority and no matter how hard you try there is just no way you can pay yourself. Don’t panic - let compound interest do the work for you.
Let’s say your nest egg is now invested with an annual return of 8% compound. The rule of 72 says that you divide the rate of return into 72 and the answer will be the number of years it takes to double your capital. Every 9 years at 8%.
So, if you are now aged 30, $100,000 will become $200,000 at age 39, $400,000 at 48, $800,000 at 57 but by this time the kids will no longer be such a demand on your wallet and you will probably have started back on the 10% rule again and have accumulated perhaps a $1 million by age 55 - and all done with little effort on your part - just imagine what the numbers will be if you take the matter of wealth creation really seriously.
Investing offshore
So just where do you invest your 10%? Richard Cayne Meyer International opines that if you are overseas from your native land, you would be advised to take full advantage of the Offshore Investment industry. This first came about with the expansion of the British Empire and even now it is the British offshore market that is favored by financial advisers.
It is perhaps the most financially sophisticated and, even more important, the most secure. It is situated in both the Isle of Man, in the middle of the Irish Sea and Guernsey and Jersey, known more commonly as the Channel Islands and a lot closer to France than the UK. Though Dublin and Luxembourg are now granting favorable tax treatment to offshore investors.
The investment companies have established themselves as Life Insurance companies to take advantage of the complete freedom from taxation afforded to them by the relevant State Governments. Furthermore, holders of the insurance company ‘products’ are protected by legislation in the event of the collapse of a company. Depending upon the company’s location, up to 100% of your investments will be returned.
Perhaps the most important piece of advice that can be given to any young person when they first begin earning their living is to practice the “10% Rule”, also known as the ‘Pay yourself first Rule’. Richard Cayne in Bangkok suggests that before you pay any bills, go to any restaurants, buy your favorite CDs or computer games, pay yourself 10%. That is 10% of your monthly take home pay, without fail, without exception, should be set aside for the long-term.
Time
Life plays tricks on us. When you are in your 20’s it is difficult to conceive that you will one day be as old as your parents. It is natural to believe that you will always be young - wrong! Get real because life is going to go faster than the speed of light and if you don’t get your act together right now, you will be in your 50’s before you know what’s hit you with little to show for all those years that disappeared in the blink of an eye.
The financial consultant Richard cayne, says that they have seen many people who sadly are going to be in a poor financial state- because they didn’t pay themselves first!
The early years are crucial, just look at these numbers. At 25, you might imagine that you would like to retire at 55, some 30 years away. Great, Plenty of time to save for that. Oh yeah? Don’t you believe it. Probably you will get married and have kids. Not an unreasonable assumption would you say? So who is going to pay for their education, food, clothes and all the other demands of parenthood? This little joy is going to last at least 20 years and believe me if you are not following the 10% rule……
So, how many years do you have for You? Probably 10 at the most, say the next five years and not again until the kids are off your hands in 20 years time. So these next few years are absolutely crucial to your long term financial well-being.
The Magic of Compound interest
So, you’ve followed the 10% rule and with a bit of good investment advice from a Financial Consultant, after five years you have accumulated, say, $100,000. Family commitments have now taken priority and no matter how hard you try there is just no way you can pay yourself. Don’t panic - let compound interest do the work for you.
Let’s say your nest egg is now invested with an annual return of 8% compound. The rule of 72 says that you divide the rate of return into 72 and the answer will be the number of years it takes to double your capital. Every 9 years at 8%.
So, if you are now aged 30, $100,000 will become $200,000 at age 39, $400,000 at 48, $800,000 at 57 but by this time the kids will no longer be such a demand on your wallet and you will probably have started back on the 10% rule again and have accumulated perhaps a $1 million by age 55 - and all done with little effort on your part - just imagine what the numbers will be if you take the matter of wealth creation really seriously.
Investing offshore
So just where do you invest your 10%? Richard Cayne Meyer International opines that if you are overseas from your native land, you would be advised to take full advantage of the Offshore Investment industry. This first came about with the expansion of the British Empire and even now it is the British offshore market that is favored by financial advisers.
It is perhaps the most financially sophisticated and, even more important, the most secure. It is situated in both the Isle of Man, in the middle of the Irish Sea and Guernsey and Jersey, known more commonly as the Channel Islands and a lot closer to France than the UK. Though Dublin and Luxembourg are now granting favorable tax treatment to offshore investors.
The investment companies have established themselves as Life Insurance companies to take advantage of the complete freedom from taxation afforded to them by the relevant State Governments. Furthermore, holders of the insurance company ‘products’ are protected by legislation in the event of the collapse of a company. Depending upon the company’s location, up to 100% of your investments will be returned.
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