You don’t need a financial adviser to tell you that starting to contribute to a pension at an early age is a good idea. There are plenty of case studies to be found that demonstrate the benefits. Here is a typical one.
- Imagine a 25-year-old worker earning £25,000-a-year putting 5 per cent of their salary into a generous company pension, with their employer contributing 10 per cent.
- If they take their pension at 70, they could potentially have built up a pension pot worth £1.275million based on average annual investment returns of 7 per cent.
- Someone saving at the same rate from the age of 40 would build up a little over £608,000 – i.e. less than half. Much of the difference is made up of compound interest (as well as tax relief).
What strikes me about this case study is the similarity with networking.
New opportunities generated by networking are the equivalent of compound interest.
Imagine the difference between a young professional who actively looks to build a powerful network of prospects and introducers in their 20s versus someone who begins in their 40s. Those years of meeting with a wide variety of connections who can bring you or introduce you to new work will make a colossal difference.
In business, your network is the lifeblood of opportunity. The stronger and more relevant your circle of clients, introducers, prospects, influencers and other connections, the more likely it is that your business will thrive.
The lesson is clear. Start to develop your network at the earliest possible opportunity. Young professionals must be given permission, time and budget to enable them to grow their networks.
There is a serendipity to growing your network. The golfer Gary Player once said, “The harder I practice, the luckier I get”. Keep adding to your network ‘pension pot’ and you won’t need to rely on luck for future business success.