Читать книгу Investing in Your 20s & 30s For Dummies - Eric Tyson - Страница 55

As I discuss in Chapter 1, investing in the stock market (and real estate) can be risky, which logically raises the question of whether investing in stocks and real estate is worth the anxiety and potential losses. Why bother for a few extra percent per year?

Here’s a good answer to that sensible question: Over many years, a few extra percent per year will increase your nest egg dramatically. The more years you have to invest, the greater the difference a few percent makes in your returns (see Table 3-1).

TABLE 3-1 How Compounding Grows Your Investment Dollars

For Every $1,000 Invested at This Return	In 25 Years	In 40 Years
1%	$1,282	$1,489
2%	$1,641	$2,208
3%	$2,094	$3,262
4%	$2,666	$4,801
5%	$3,386	$7,040
6%	$4,292	$10,286
7%	$5,427	$14,974
8%	$6,848	$21,725
9%	$8,623	$31,409

These numbers are simply amazing! Start first with the 25-year column in Table 3-1. For every $1,000 invested over 25 years, you’ll have $1,282 at a 1 percent annual return. At a 9 percent return, you’ll have $8,623, or nearly seven times as much!

Now look at what happens over 40 years. At a 9 percent investment return, you’ll have more than 21 times as much money versus what you’d have with a 1 percent annual investment return.

Here’s a practical example to show you what a dramatic difference earning a few extra percent can make in accomplishing your financial goals. Consider a 30-year-old investor who’s saving toward financial independence/retirement on his $60,000 annual salary. Suppose that his goal is to retire by age 67 with about $45,000 per year to live on (in today’s dollars), which would be about 75 percent of his working salary.

If he begins saving at age 30, he needs to save about $690 per month if you assume that he earns about 5 percent per year average return on his investments. That’s a big chunk to save each year (about $8,300) — amounting to about 14 percent of his gross (pretax) salary.

But what if this investor can earn just a few percent more per year on average from his investments — 8 percent instead of just 5 percent? In that case, he could accomplish the same goal by saving just half as much: $345 per month (or $4,150 per year)!