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Section 4

Basic Principles of

Investment Success

You will have to develop and maintain an investment strategy

in retirement that will provide the returns needed to prevent
you from running out of money. Obviously, higher returns give
you more money to use for retirement income.

An investment of $500,000 growing at An investment of $500,000 growing at
3% compounded annually over a 20-year period. 6% compounded annually over a 20-year period.
Year Balance Year Balance
1 $ 515,207.98 1 $ 530,000.00
2 $ 530,878.52 2 $ 561,800.00
3 $ 547,025.70 3 $ 595,508.00
4 $ 563,664.01 4 $631,238.48
5 $ 580,808.39 5 $ 669,112.79
6 $ 598,474.23 6 $ 709,259.56
7 $ 616,677.40 7 $ 751,815.13
8 $ 635,434.23 8 $ 796,924.04
9 $ 654,761.57 9 $ 844,739.48
10 $ 674,676.77 10 $ 895,423.85
11 $ 695,197.71 11 $ 949,149.28
12 $ 716,342.82 12 $ 1,006,098.24
13 $ 738,131.07 13 $ 1,066,464.13
14 $ 760,582.03 14 $ 1,130,451.98
15 $ 789,715.86 15 $ 1,198,279.10
16 $ 807,553.33 16 $ 1,270,175.84
17 $ 832,115.84 17 $ 1,346,386.39
18 $ 857,425.44 18 $ 1,427,169.58
19 $ 883,504.85 19 $ 1,512,799.75
20 $ 910,377.50 20 $ 1,603,567.74
Final Savings Balance: $910,377.50 Final Savings Balance: $1,603,567.74

Chapter 6: Your Action Plan