
Recently, we conducted a poll with the intention of assessing the value people place on the interest rate or return they earn on their savings and investment over time. The poll, targeted largely at tech-empowered young Nigerians, had 858 voters and the engagement level was nothing short of impressive. Unfortunately, that is where the excitement ends. The poll outcome is shown below:
Efe is 24 yrs old. At 10% interest rate p.a., what monthly #savings will make him hit a financial goal of ₦100M at age 60?#PersonalFinance
— Cowrywise (@cowrywise) May 7, 2017
What does this poll outcome say?
81% of voters grossly underestimate the long-term value-creating power of interest rate on their savings or investment.
About 40% of voters considered interest rate as having zero impact on long-term savings or investment.
Let us break down this poll. Really, to get the exact answer you might need to do some number crunching but we will not bother you with such. That is not the objective. This is not an ACCA or CFA Class. The most important finance awareness is that when you save or invest consistently over time with a return such as 10% per annum, you get a value that is multiple of what you actually saved or invested.
Option A (₦231,000) is wrong because it has not considered the 10% interest Efe will earn over the 36 years. Without this interest, Efe would have to slave through saving ₦231,000 monthly in order to hit ₦100Million by the time he is 60 years old.
However, with the 10% annual return considered, he needs to save only ₦24,000 monthly to achieve a financial goal of ₦100Million by age 60. Yes, you read that correctly. Just ₦24,000.
It is also important to note that the higher you flip the interest rate, the lower the amount Efe would need to save monthly. This is how the actual outcome works out over the 36 years period with our 10% interest rate per annum.
Amount actually saved by Efe: ₦10.3Million
Value created from returns: ₦89.8Million
This here is the magic of compound interest over a long period. In simple terms, over the years, the returns on Efe’s savings start to earn returns, the second wave of returns combine forces with the first wave to produce the third wave of return and the returns continue to spiral (compound). Got it?
So our reference saver here Efe is 24 years. Ibrahim is 20 years old. And Uncle Lekan is 40 years old while my sister Jane is 30 years old. How much does each person need to save/invest monthly at 10% return to reach a financial goal of ₦100Million by age 60? We have a simple tool you can reference to determine that magic number.
Still confusing? Ok, let us interpret the numbers and how this fits into personal finance.
Ibrahim.
Age: 20 years. If Ibrahim set the goal of achieving ₦100Million when he turns 60, he will need to save ₦15,813 monthly from age 20 to achieve that financial goal. He basically has more time (40 years) for his returns to compound over time and take him to his financial target.
Jane.
Age: 30 years. For Jane to achieve the same financial goal, she needs to save ₦44,238 monthly between now and when she turns 60 years old.
Uncle Lekan.
Age: 40 years old. If uncle Lekan, now 40 years old, set the same financial goal of achieving ₦100Million when he turns 60, he will need to save ₦131,688 monthly to achieve that goal.
You can simply see your age bracket and how much you need to save/invest to achieve the same financial goal.
Key Takeaways for Personal Finance
There are 3 major drivers of the magic of such return as seen above:
1. Start saving and investing early in life:
It is never late to start but the earlier the better. Compare what Ibrahim and Godwin need to save to achieve the same objective. The difference is explained by the starting time.
2. Consistency of saving and investment:
The more consistent you are with your saving and investment programme the better. It is advisable to make saving and investing a regular culture by saving and investing daily, weekly or monthly.

3. A good and modest return:
The more the returns, the better. It is, however, important to understand what modest returns look like and not cross to the realm of a Ponzi scheme. More often than not, real and genuine investment programmes will not double your money overnight. Starting early, consistency and modest return do that for you over time.
What if there was a platform that allows you to save and invest regularly (tick 2) and earn a modest return (tick 3) with ease? Add to that, the flexibility to personalise your saving goals e.g to build a house, to pay for children’s school fees (this is an investment actually) and much more. This is what Cowrywise offers.
Cowrywise is a savings automation platform that helps you automate your periodic savings towards meeting your set financial goals. You specify an amount and date and Cowrywise will automatically save an amount away from your bank account into your Cowrywise account. Your savings currently earn a minimum return of 10% per annum.
If you haven’t done so, go ahead and start saving today by signing up at www.cowrywise.com. No fees, no fines, no penalties.
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I enjoyed every bit of this article. Will return for a second reading.
Whoosh!
Thank you, Edima.
Just bookmark it in your browser for easy access.?
Mobolaji no words just thank you for this beautiful piece!
The push I needed..thank you
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This was worth every minute. A real eye opener. Thank you Cowrywise!
Thanks for reading, Patience!
Thank you.
Sure doing my best to invest and save.
Wow…..I really appreciate your effort on this beautiful savings
☺️
I really enjoy reading your post. Please can you elaborate more on the design thing I do not understand it and if I want to invest for my wife or daughter, how do I go about it thank you.
Hi Oyebanji, it’s easy to invest for your wife and daughter. You can begin investment plans on their behalf with your account or use your referral code to get them to sign up. After they sign up, they can both start investment plans on the platform.
We’ll send you a comprehensive mail shortly.
Please read all about the Design Fund for women here: https://cowrywise.com/blog/investing-in-women/
Applications close on the 25th of March, 2021.
I loved every part of it. I loved how your vulnerability gave you the strength to be financially secured. Thank you so much! I took few notes I will work on.
Awesome! ??
Long but worth the read. I will spend my money better now. I will save and I have just been pushed to invest more than I ever have. Thanks for this piece.
Thanks for reading, Rhoda!
Please can you write every article on the INTERNET!!! This was so relatable yet so informative I felt like I was talking to a friend !!!! I love you already !!!
? Thank you so much, Obianuju.
Insightful!!! I enjoyed how you “gisted” the knowledge.
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Nice article.
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Just what i needed, thank you!
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Beautiful write up.
The “do not eat tomorrows yam” hit the hail harder.
Thank you cowrywise for the many beautiful contents.
Thanks for reading as well, Victoria.
Thank you so much for sharing. I especially love how you delineated the plan to create the plan. Thank you really. This has been so helpful especially at this crossroads I find myself.
So glad it helped.
Wonderful I enjoyed the article
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This is archive worthy. Something you screengrab and then go back to everytime you loose guard
Whoosh! ?
Thank you, Amal.
I tell you
This was lengthy but encompassing, thanks for writing
Thanks for reading, Faith…
Factory setting occurred in my brain. Thank you sir.
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Wow!!! Love this Piece. Truely from a reset brain.
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This is an amazing write up and yeah, an eye opener. And I love the fact that it’s so relatable with the small small vernaculars, lol, e long but e sweet.
“e sweet”!
Haha. Thanks Folajimi
This is proper financial advice. You have mapped out s lot of strategies that will benefit me financially if properly applied as a young professional. Thank you for the sound advice, Mobolaji.
Awesome content! Great push! Thank you very much ma’am ❤️❤️❤️
Nice piece. Really inspiring to me even as a man.
What a nice article .???. You did a great job ma
I want to give you loads of hugs. Your post today couldn’t have come at a more better time. This post reminded me of Andy Mineo’s quote on Vulnerability…It draws people in closer to say ‘me too’. This was certainly the energy booster I needed after running numbers today.
I really enjoyed reading this. I’ll share with the teen girls I mentor. Thank you so much.
Such an insightful piece! You’re a good writer Mobolaji!
Thanks for sharing.
Thank you Mobolaji. Thank you very much.
Thank you for providing the materials needed to build a good financial culture.
Insightful and relatable!
You rock!!!!!!!!!!
Deep stuff, useful to both men and women alike!
Thank you for sharing!
I feel like saving this write up somewhere to be reading every month…If I hear say na for women alone…Thank you so much for sharing.
Thank you very much for this,
It is very relatable,
Every woman ought to be financially stable to avoid stories that touch,
Thank you once more.
I’m really touched by this guidelines and I see myself becoming greater from this piece ❤️
I enjoyed this article. Every line and wors spoke to me. Thank you so much, i really find this inspiring
I really enjoyed this article , thanks so much
Thank you so much for this❤️
I look forward to implementing what I learnt and reading more of your articles
This Uplifting article is just what I need as a Student who’s trying to be money-wise. Thanks, I’ll be sharing this.
This is really so insightful. Thanks so much, Mobolaji. I’ve got a new perspective
Thank you so much For the piece. May God help me to invest.
Thank you for this piece, I have taken a different path now to wealth creation, but do you or cowryrise offer mentoring programs?