CNN.MONEY Article Today

[heeyy_joe]

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

 

[hsv_climber]

And if return is negative real, like currently expected on most bonds?

 

[samclem]

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!

 

[mickeyd]

Early makes it easy.

 

[obgyn65]

There is little doubt that the earlier delayed gratification is, the better the final result will be.

 

[aida2003]

I'm guessing $1.1mln is in Future dollars?

 

[ziggy29]

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.

 

[Sesq]

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.

 

[aida2003]

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

 

[ziggy29]

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.

 

[aida2003]

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.