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Old 04-17-2013, 11:41 AM   #1
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CNN.MONEY Article Today

CNN Money article:

Building wealth: Best moves if you're 25 to 34 - Get with the program (7) - Money Magazine

THE POWER OF AN EARLY START
How much you'd have at 65 if you save $5,000 a year from ages:
25 to 35: $602,100
35 to 65: $540,700
25 to 65: $1.1 Million
Note: Assumes 7% average annual returns. Source: J.P. Morgan Asset Management
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Old 04-17-2013, 03:48 PM   #2
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And if return is negative real, like currently expected on most bonds?
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Old 04-17-2013, 03:53 PM   #3
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Note: Assumes 7% average annual returns. Source: J.P. Morgan Asset Management
That's a real kicker inthe fine print. And they left out "real" when describing the projected returns.

If I could count on that, my annual "take" would be sweet!
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Old 04-17-2013, 07:54 PM   #4
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Old 04-26-2013, 06:37 PM   #5
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There is little doubt that the earlier delayed gratification is, the better the final result will be.
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Old 05-16-2013, 08:25 AM   #6
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I'm guessing $1.1mln is in Future dollars?
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Old 05-16-2013, 08:36 AM   #7
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The assumption (7% real annual returns) is pie in the sky, but the underlying math still works the same way for more "sane" projections like 4-5%. It's just not as huge a difference, but still substantial.
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Old 05-16-2013, 08:41 AM   #8
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Ah, the magic of compound interest. My father gave me a sheet of paper when was in college that should I could have an equal pot of money at 65 if I saved $2k/yr from 22 to 30 (I think) to if I saved from 32 to 65. This was back when 12% wasn't so crazy.

He made the point that you shouldn't stop at 30, too.

It actually had a pretty big impact on me.
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Old 05-16-2013, 08:56 AM   #9
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The assumption (7% real annual returns) is pie in the sky, but the underlying math still works the same way for more "sane" projections like 4-5%. It's just not as huge a difference, but still substantial.
I missed this part...it's a stark difference from Mr. Pfau's prediction of 2-2.5% real return for the future. JPM is VERY optimistic, maybe they mean their own fee structure
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Old 05-16-2013, 09:18 AM   #10
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I missed this part...it's a stark difference from Mr. Pfau's prediction of 2-2.5% real return for the future. JPM is VERY optimistic, maybe they mean their own fee structure
I think 2-2.5% long term is too doomsday, really. For a 25-year-old who has an age-appropriate AA for retirement savings (at least 75% in equities, let's say), if all we can get is 2.5% real growth for 30-40 years, frankly we're pretty doomed and a comfortable retirement is pretty low on the list of our concerns.
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Old 05-16-2013, 10:14 AM   #11
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I think 2-2.5% long term is too doomsday, really. For a 25-year-old who has an age-appropriate AA for retirement savings (at least 75% in equities, let's say), if all we can get is 2.5% real growth for 30-40 years, frankly we're pretty doomed and a comfortable retirement is pretty low on the list of our concerns.
I really hope he's wrong and I don't think about his said 2.5% real growth because I'd get depressed.
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