Luke Littler might consider investing his earnings to make his money work smarter

Compare and Invest Founder and CEO Bella Caridade-Ferreira offers this suggestion:”,16-year-old Luke Littler earned £200k coming second in the Darts Championship. The tax man will take £83.7k of that leaving him with just £116.3k.

As Luke is very young, he can make his money work harder for him until he retires. If Luke invested his £116.3k for 50 years, his money would grow to a whopping £2.1m over 50 years (growth rate of 6%)”

.As the calculations below show, the longer you are in the market, the greater the growth.

“, However, if Luke put 60k into a pension (the maximum annual contribution), he could reduce his tax to just £58k, giving him £143.3k to invest. That’s because the Government gives you tax relief on annual pension contributions of up to £60k, essentially cashback of £27k for Luke.)

The £27k difference is small, but over time it adds up. Over 50 years, it means that Luke’s investment more than doubles. But even over 25 years, the 27K earns him a further £390k. The moral of the story is therefore to invest as much as you can for as long as you can.”

Amount Interest rate Years Final amount

£116,300 6% 10 £181,575

£116,300 6% 25 £461,210

£116,300 6% 50 £2,142,264

£143,300 6% 10 £229,130

£143,300 6% 25 £850,780

£143,300 6% 50 £5,097,297

Note: Calculations have been run based on a standard 6% annual growth. Potential investment returns would normally vary year on year and the ultimate results could be lower or higher than the sums shown.

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