I’m all in favour of 1% movements.
If you increase your salary by 1% and decrease your costs by 1% and do that every month then at the end of a year you have 24% more than you started with – that’s a good thing. If you double your investment return from 1% to 2% then you more than double your profits because of compounding.
If you want to make a 100% change in something in your life then it’s easier to make 100 1% changes than try and change the whole thing in one go. In many cases 1% increments result in far more than just the 1% change. And a new report out by Wealth at Work tells us that if we increase our pension contributions by 1% in our 20’s then the eventual pension pot is 25% higher by the time of retirement.
That’s a great financial demonstration of 1% incremental gains and most of us wouldn’t miss that 1% but if we commit to that when we’re young then it makes a massive difference long term due partly to the returns and partly due to compounding where you get gains on previous gains made.
Obviously on its own 1% doesn’t make much difference and it’s a poor investment or savings return on its own but combined with the time involved it makes a huge difference to the overall return eventually.
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