The Best Way To Save

In yesterday’s post, we wrote about the importance of saving in order to continue our lifestyle into retirement.

SAVING THE RIGHT AMOUNT

The earlier in life we begin regular saving, the smaller the percentage of our income needed in our retirement fund in order to continue our working years’ lifestyle into retirement.

The ultimate size of that fund is a product of three variables:

1. the percentage of our income which we save
2. the return on investment we get on our savings
3. the length of the saving period

Here is a test.

Is any one of these three more important than the other two?

If so, which one?

Let us assume an annual income of 70,000 dollars, 10% of which we save into our retirement fund and are able to invest at 6% annually.

In the following table, we increase each variable separately, by a third.