top of page
  • Writer's pictureVictoria Wallis-Smith

The secret ingredient... to building wealth

Forget about location, location, location being the key to a good investment outcome.

All that’s needed is time and discipline – and letting the secret ingredient of compounding do its work!

Wealth Secret. Compounding. Build Wealth. Money Coach.

Compounding means earning interest on your savings, and then earning interest on the interest that those savings earn!

It's easier to understand if we look at an example – let's see what happens to our investment when we start with $100 and add $100 each week, and we’ll assume that the investment pays a return of 5%pa, compounding monthly (I know, not the kind of return you get in a bank account – but a 'balanced' investment fund).


Regular Saving

Total Interest

Total Savings

5 years




10 years




15 years




20 years




25 years




You can see from the table how a habit of regularly investing can potentially turn a relatively small amount ($5,200pa) into a significant sum of money.

To budget or not to budget

So, your next question is “How do I find $100 per week?” (Of course, your regular investment doesn’t have to be that amount).

But just for fun, have a think about what you could do to free up $100 per week...

  • Cook dinner at home instead of eating out – by the time you add in drinks a meal out can add up.

  • Taking lunch to work is a big saver – and maybe you could cut back on your coffee purchases if you’re a regular at the local café.

  • Review ‘essentials’ like your mobile phone plan and streaming services to get better deals – and direct the extra cash straight to your investment.

And now you're saying “That’s too hard!” or “I don’t want to give that up!” but in return for this self-restraint, let’s see what you could achieve...

  • Having $29,000 in 5 years might go towards a deposit on your first home or a big overseas holiday.

  • Or $67,000 in 10 years might contribute to your children’s secondary or tertiary education.

  • Or the extra $258,000 in 25 years might help you to retire more comfortably or earlier.

What's your goal?

With a goal to work towards, would you feel like the 'sacrifice' is worthwhile in the long run?

At Nutshell Money, we believe it’s as important to understand your goals as it is to budget.

That means writing down your goals – it’s much easier to make a sacrifice if you know what you’re working to achieve.

And reducing expenses is not the only way to find a ‘spare’ $100 each week.

Another good time to start regular savings is when you receive an increase in your income from a new job or a pay rise – before you spend it ‘pay yourself first’ and send it to your savings or investment first.

The trick?... start soon

Everyone’s ability to save is different – if you can’t save $100 every week, compounding is still your best financial friend.

For example, if you can save $50 per week simply halve the results in the table above. Or if your savings capacity is higher, multiply the figures.

What’s important is that you have the effect of time and compounding returns on the value of your investment.

So, the sooner you start, the less you need to save to achieve the same outcomes.

A plan that’s right for you

These examples (based on Moneysmart’s Compound Interest Calculator) are aimed at highlighting the benefits of time and discipline when it comes to investing in a regular savings plan.

To keep things simple, we have not taken into account other factors that will impact on the outcomes, such as taxation, fees, and differing investment returns. But these factors are important and need to be considered when you are deciding long-term investments – you should seek qualified advice before making any investment decision.

Budgets and money habits

If you’d like to discuss money coaching – to learn better budgeting with a focus on 'paying yourself first' – let's get started, by having a chat on the phone.


bottom of page