To save or to invest? Or do we do both?
There can sometimes be a misconception that by simply investing in the markets, you will be able to accumulate enough savings for retirement. The unfortunate reality is that the growth that can be achieved from investing is extremely important, but there must be an adequate amount of savings set aside over time for it to work.
The following example can show you exactly how critical the savings process is. A portfolio that grows at an average rate of 7% over time for 20 years will have approximately 50% of its ending balance due to the savings added over the years and the other 50% due to the investment growth. The image shows how the growth portion of the portfolio (the green part of each bar) increases over time. This portfolio assumes an average growth rate of 7% and a recurring addition of $5,000 at the end of each year. After 20 years, the portfolio value is worth over $200,000. It is critical to save and begin saving early.
If you have questions about your current retirement plan and how you can best maximize your return, contact us to day to schedule a meeting.
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