There’s no better time than now to start saving for the future. Retirement is becoming longer and more expensive with many costs likely to come out of your own pocket. Here are 4 investment strategies to get you on the right path and give yourself an edge toward meeting your retirement goals.
The following infographic** is from sparkline.motifinvesting.com (under the original title of 4 Investment Strategies to Grow Wealth) and the introductory commentary* is from VisualCapitalist.com (under the original title of With Investing, Little Things Make a Big Difference).
Produce More Than You Consume & Save the Difference
The equation for growing wealth is actually quite simple: produce more than you consume, and save the difference. Being disciplined and smart means that unnecessary expenses are cut, and any savings can go towards the bottom line. For example, if the money going towards a $4 latte each day was invested, it would amount to $25,994 in 10 years or $440,198 in 40 years. This is based on a fairly ambitious 8% annualized return, but still proves the point.
Avoid High Management Fees
There are other expenses, including some coinciding with investing itself, that can eat away at the bottom line as well. Keep in mind that the investment industry is designed around taking a haircut off of each dollar spent, and that this money helps employ millions of people around the world. Fees, commissions, and other extras can add up. In the above example, a 1% difference in expenses translates to a $30,000 difference to the investor over 30 years. Keep in mind that the average mutual fund charges a whopping 1.163% in fees.
By saving early, those extra years of compound interest can make an impact in the hundreds of thousands of dollars at retirement.
By diversifying a portfolio, the example shows that 90% of risk from asset allocation can be avoided.
Original Sources: *http://www.visualcapitalist.com/investing-little-things-make-big-difference/ (Copyright © 2014 Visual Capitalist | All rights reserved.) **http://sparkline.motifinvesting.com/investment-strategies-to-grow-wealth/8273 (© 2014 Motif Investing, Inc. All rights reserved.)
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