Simulating the compounding of SA from young

I initiated the top-up of my child’s SA in September 2019 to kick off the power of compounding interest. A monthly $100 top-up is a small but steady way in building up her assets. To reiterate, the first $60,000 of combined balances (with up to $20,000 from the OA) earns an extra 1% interest.

It will be a long way before the first combined $60,000 is reached. This also means every top-up earns 5% p.a.! It is too good a deal if parents start young enough. Do note however, it is essential to top up what you can afford as it is a one-way transfer till a good 55 years later.

How would this work out for my child if I were to do that till she reaches the adult age of 21 at the end of year 2038? In this case, MA and SA both earn 5% interest as they are well below the combined balances of $60,000.

YearMASATotal
2019$4,136$504$4,639
2020$4,342$1,756$6,099
2021$4,559$3,072$7,630
2022$4,786$4,452$9,238
2023$5,024$5,901$10,925
2024$5,274$7,423$12,697
2025$5,537$9,020$14,557
2026$5,812$10,697$16,510
2027$6,102$12,458$18,559
2028$6,406$14,306$20,711
2029$6,725$16,246$22,971
2030$7,060$18,282$25,342
2031$7,411$20,421$27,832
2032$7,780$22,665$30,446
2033$8,168$25,022$33,189
2034$8,575$27,495$36,070
2035$9,002$30,092$39,094
2036$9,450$32,819$42,269
2037$9,921$35,681$45,601
2038$10,415$38,685$49,100

With a total top-up of $23,300 over the years, she will have a combined balance of $50,000 when she starts work in society. This first $50,000 will continue working hard for her at 5% p.a.

One thought on “Simulating the compounding of SA from young

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: