0.8%. Doesn’t look like much. Doesn’t sound like much. By itself, it’s not much.
And that’s how the fuckers of the payday loan industry get you. Come on guy, it’s only 0.8% a day, whats the worst that could happen? Well, I’m not your guy, buddy.
See, 0.8% is what the payday loans are currently capped at, per day. This has a representative APR in the 1,000s of %. A quick google shows the following representative APR’s for a few payday loan companies;
|Some real crappy loan rates|
Admittedly, the total repayment for a payday loan is now capped at 200% of the original loan, but let’s ignore that for now.
Let’s also ignore the fact that the Bank of England Base Rate is currently 0.5% a year, so less than the daily rate on a payday loan.
Imagine saving with this kind of return
Saving £250 a month, with an assumed rate of return of 8% per year over 20 years nets us a sweet £142,250.
If we were to assume an annual return of 1,295%, the rate that is advertised on sunny.co.uk, with the same monthly savings and over the same time frame, we would increase our £142,250 to £7.9×10^25… that’s;
Or £79septillion, obviously.
According to wikipedia the Gross World Product was $59.38 trillion. That’s $59,380,000,000,000.
You would be worth 1.3 trillion earths, assuming a 1:1 exchange rate. Not bad.
How long would it take to achieve Financial Independence?
If we are looking for £625,000 then it would take us 30 months to breach this, or just wait another two months to break the £1 million barrier.
In fact, you could save a mere £1 a month and it would take you just 55 months to reach Financial Independence at this rate or save a measly 1p a month and it would take 76 months.
If you could invest with this kind of return, you would, but why people borrow at these rates blows my mind. Of course, rates of return like this aren’t going to happen, so you may as well play the lottery.