Financial wellness

Principles for investing success in four figures

February 14, 2024

Graphic shows how the proportions of savings and investment returns in contributing to an investment goal changes over time. Three pie charts above an x-axis labeled “Goal horizon (Years)” show these proportions at different goal horizons: 2-year, 10-year, and 30-year. The charts show that as the goal horizon increases, the contribution to the goal amount from savings diminishes and the contribution to the goal from investment returns increases. At 2 years, the contribution proportions are 94% savings, 6% investment returns; at 10 years, they are 80% savings, 20% investment returns; at 30 years, they are 51% savings, 49% investment returns. To the left of the pie charts, two people are shown, one of whom is throwing a ball toward the pie charts as if toward a target.
Graphic shows bars representing the top 5%, bottom 5%, and average annual returns for six different global stock/global bond asset allocations for the period from 1901 through 2022. The vertical axis represents annual return. The horizontal axis represents asset allocations that move from 100% bonds/0% stocks on the left to 0% bonds/100% equity on the right. Six bars are arranged horizontally, each labeled with its asset allocation and each showing the top 5% (95th percentile), bottom 5% (5th percentile), and average annual returns for that allocation. A double-pointed arrow runs under the bars, labeled “Less risk” on the far left and “More risk” on the far right.
Graphic shows a line chart that plots after-cost returns for four portfolios, each with a different level of cost, over time. The y-axis represents portfolio value in dollars. The x-axis represents time in years, running from zero on the left to 30 on the right. Four lines are shown, each of which plots after-cost returns for a different portfolio: one with costs at 0.1%; one with costs at 0.7%; one with costs at 1.3%; and one with costs at 2.0%. Over time, the difference in value of each portfolio becomes more marked; the lower the costs of the portfolio, the higher the ending portfolio value. From lowest- to highest-cost portfolio, values at 30 years are as follows: For a portfolio with costs at 0.1%, the value at 30 years is $557,383; for a portfolio with costs at 0.7%, the 30-year value is $465,899; for a portfolio with costs at 1.3%, the 30-year value is $389,846; and for a portfolio with costs at 2.0%, the 30-year value is $317,081. To the left of the lines’ starting point, a man is shown facing the lines with his hands in his pockets, in front of a large circle with a dollar sign in front of it.
Infographic shows line chart that plots how many years would be needed to save $500,000 under three scenarios—higher savings, higher return, and baseline—that assume different contribution rates and market returns. The y-axis represents dollars. The x-axis represents time, with zero on the left and a right-facing arrow on the right. Three curving lines are shown, each of which plot the outcomes of one of the scenarios. The lines start at the same point but diverge over time, with the line representing the higher-savings scenario reaching the goal first, followed by the line representing the higher-return scenario, and (much later) by the line representing the baseline scenario. Under the higher-savings scenario (4% annual return, 5% savings increase), 39 years would be needed to reach the goal; under the higher-return scenario (6% annual return, 0% savings increase), 45 years would be needed; and under the baseline scenario (4% annual return, 0% savings increase), 69 years would be needed. To the left of the lines’ starting points, a man is shown, carrying a watering can and walking toward a houseplant that is taller than him.
Illustration shows four icons in a row. Below each icon is a label; below each label is a brief caption. From left to right, the principles shown are goals, balance, cost, and discipline. For goals, the icon is a mountaintop with a flag and the caption is “Create clear, appropriate investment goals.” For balance, the icon is a set of scales; the caption is “Keep a balanced and diversified mix of investments.” For cost, the icon is two stacks of coins; the caption is “Minimize costs.” For discipline, the icon is a stopwatch; the caption is “Maintain perspective and long-term discipline.”
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