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As a continuation from where I left off, here’s the chart on how it would have looked like if you’d followed the steps mentioned earlier- by allocating an X% of your income into an untouchable fund.

Here’s the story behind the chart…

This individual, let’s call him Mr Boh Ban Huat, started off working at the age of 25 years old. He earns an annual income of RM 24,000 and he managed to allocate 3% (RM 720) of that into a fund which gives him 10% return for that year. In the first year itself, he managed to make an extra RM 72.00 from his small investment. (This paragraph is contructed entirely from the first line of the chart).

Ban Huat is a very hardworking chap. His hard work was rewarded in the first year with a 2% increment and this happened every year until he’s aged 30 (see the Income Increment Ratio column in the chart that reads 102%). During these years, he has also increased his percentage from the initial 3% allocation to 5.5%. Since he didn’t touch the money in the fund, the accumulated interest at 10% has earned him RM 8,818.01 in the fund by the time he’s 30 years old.

Ban Huat continued this habit for many years to come, and when he’s near retiring at the age of 55, he manages to contribute even more to his fund (up to 15%) while his annual income stops increasing.

At his retirement party, Ban Huat has managed to saved up to RM 552,368 effortlessly and in fact, he was pretty much surprised at how much this automated process has bloated his initial savings.

He then decided to share this spreadsheet with anyone who might be interested to fiddle with the figures and see the impact of this automated saving system. You can email him to get a copy.

Okie, that last paragraph was totally made up. However, if you are really interested to try out and see for yourself how this system can apply to you, just sent me an email and I shall attach this spreadsheet for your own reference.

In the next post, I shall conclude the benefits of using this system as compared to a personal budgeting system.

Articles in this series:

Part 1: My Personal 2007 Budget and Expenditure System
Part 2: The Magical X
Part 3: Automated Savings Chart
Part 4: The Better Way to Save

• The Better Way to Save
• The Magical X
• My Personal 2007 Budget and Expenditure System
• Personal Finance Strategy: Numbers You Should Know
• Bank Officer's Side Income
• Common Banking Mistakes
• Richest Malaysians: TOP 20
• The Power Puff Financial Disaster