Lots of us love to shop. Some of us were born to shop! But did you know that you can now earn compound interest on your superannuation, through Super Rewards?
What is compound interest?
Compound interest is the addition of interest to the main sum of a deposit. Basically, it’s interest on interest.
The idea is that it’s reinvesting interest – rather than paying it out. The interest in the next month, for instance, is applied on the main sum, as well as the accumulated interest from the previous month.
To use an example from our friends at Barefoot Investor: If you put $100 into a term deposit paying 5 per cent a year, after a year you will earn $5 dollars in interest, leaving you with a total of $105. If you choose not to spend the $5, and instead put the $105 in for another year in the fixed term deposit at 5 per cent, you’ll now have $110.25 after the second year. Put the $110.25 in for another year and you’ll have $115.75.
Here’s one of our favourite calculators – the ASIC compound interest calculator. It shows the above calculation, using $100 to start, compounding monthly, for 25 years, at a rate of 5%. Note that your contributions are $1500…but the compound interest is greater, at $1726. And best of all, YOU didn’t have to contribute that $1726.
Now imagine how that graph could look if you applied it to your superannuation – where you’re starting with a far bigger balance, and if you made far more regular contributions. We’ve produced an animated version of that calculation – it’s pretty powerful.
What is the secret to compound interest?
- Regular contributions
Time – the sooner you start, the sooner you’re earning compound interest.
Regular contributions. It can be really tricky to find extra money each month to add to your super. This is where Super Rewards comes in, as we’ve blogged about here.
How does Super Rewards help me earn compound interest?
Super Rewards is an online shopping platform where Australia’s leading retailers pay cash rewards in your super. Yes, THE RETAILERS – not you – are contributing to your super, with an average cashback of 5%.
It’s super simple. You come to Super Rewards, you shop at any of the 130+ retailers available, and they pay the cash reward into your super.
Our animated calculation above showed earning $30 per month in your super through Super Rewards. It’s easy to do: by the time you shop online at Woolworths every week, buy some clothes for yourself or the children at THE ICONIC every few months, buy some pet food from Petbarn, some Christmas gifts from Booktopia, and perhaps book a holiday with P&O Cruises….you would easily meet the average amount of $30 per month.
So join Super Rewards now – don’t wait any longer!