Sunday, October 02, 2005

More money made by saving than by high returns

A study released by Putnam Investments in Boston determined that increasing the money saved in a 401(k) had a greater impact on accumulation than picking a high-flying mutual fund.

Over a fifteen year period studied, doubling the amount invested from two percent to four percent doubled the amount saved. No kidding?

What was interesting was that over the same period, the difference between picking the best-performing mutual funds versus the worst-performing funds resulted in only a six percent difference in overall wealth. Increasing what was saved was 90 times more powerful than changing what was the investment.

Think about that for the next gas guzzling SUV payment. No one below the Forbes 400, really, can afford the cost.


Anonymous susan said...

well that is good to know. we spend so much of our time looking for higher returns instead of saving more and we havent saved enough. thanks for the article!

4:53 PM  

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