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Investing Principle #7: How investment returns may improve your quality of life?
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By now, you understand what it takes to build a sizable investment portfolio over time. John began investing $100 per month, with an assumed 12.5% annual return, he was able to accumulate $510,000 by the age of 50.
But what can you do with $510,000?
You could use this portfolio to supplement your salary or potentially live entirely off your investments. Let’s say John lives to age 100 and chooses to draw income from his portfolio. If he continues to earn a 12.5% annualized return, he could withdraw $5,314 per month for the next 50 years (see Chart 1).
These projections are based on a 12.5% annual return, which may or may not be realistic in the future. Still, it’s a powerful visual showing how small, consistent contributions can grow into a meaningful retirement portfolio. The ability to withdraw over $5,000 per month for 50 years demonstrates how investing early and regularly can partially or fully fund your cost of living later in life.
To keep the focus on the time value of money, I’ve kept the assumptions simple. In real life, you would likely want to account for inflation, changing expenses, and market volatility. The actual performance could be higher or lower depending on market conditions.
Nonetheless, this example highlights the incredible potential of disciplined investing and the long-term benefits of starting early.
(Chart 1. What can you do with $510,000? How one may turn $100 monthly contributions into $510,000 portfolio and then enjoy over $5,000 each month for the rest of his or her life)
Disclosures:
The analysis is based on historical data and future expectations that may not be correct. This paper was written as an opinion only. The data is not guaranteed to be accurate or complete. Please consult with your financial advisor before making an investment decision. Neither ECNFIN.COM nor its author is responsible for any damages or losses arising from any use of this information. Past performance doesn’t guarantee future results.
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By Ivan Sichkar, CFA, FRM, CFP®
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33 ratings
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Enter your email address to follow ECNFIN.com and receive notifications of new articles by email for free. Be the first to read and do not miss future timely research publications.
By now, you understand what it takes to build a sizable investment portfolio over time. John began investing $100 per month, with an assumed 12.5% annual return, he was able to accumulate $510,000 by the age of 50.
But what can you do with $510,000?
You could use this portfolio to supplement your salary or potentially live entirely off your investments. Let’s say John lives to age 100 and chooses to draw income from his portfolio. If he continues to earn a 12.5% annualized return, he could withdraw $5,314 per month for the next 50 years (see Chart 1).
These projections are based on a 12.5% annual return, which may or may not be realistic in the future. Still, it’s a powerful visual showing how small, consistent contributions can grow into a meaningful retirement portfolio. The ability to withdraw over $5,000 per month for 50 years demonstrates how investing early and regularly can partially or fully fund your cost of living later in life.
To keep the focus on the time value of money, I’ve kept the assumptions simple. In real life, you would likely want to account for inflation, changing expenses, and market volatility. The actual performance could be higher or lower depending on market conditions.
Nonetheless, this example highlights the incredible potential of disciplined investing and the long-term benefits of starting early.
(Chart 1. What can you do with $510,000? How one may turn $100 monthly contributions into $510,000 portfolio and then enjoy over $5,000 each month for the rest of his or her life)
Disclosures:
The analysis is based on historical data and future expectations that may not be correct. This paper was written as an opinion only. The data is not guaranteed to be accurate or complete. Please consult with your financial advisor before making an investment decision. Neither ECNFIN.COM nor its author is responsible for any damages or losses arising from any use of this information. Past performance doesn’t guarantee future results.
Never miss an episode
Subscribe wherever you enjoy podcasts:
Apple
Spotify
Amazon
Our Mailing Address:
ECNFIN
1288 Kapiolani Blvd Apt 4003, Honolulu, HI 96814
Our Phone:
+1 720-593-1135
Our Fax:
+1 720-790-7606