60 Don’t Make Me Say I Told You So The Importance of Compounding $500,000 investment over 20 years $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 0 5 10 15 20 years This is a hypothetical example for illustration purposes only. Actual investor results will vary. Investing in securities involves risk including the loss of principal invested. Past performance is no guarantee of future results. 10% ($3,363,750) 8% ($2,330,479) 6% ($1,603,568) 4% ($1,095,562) 2% ($742,974) As you can see from the chart above, if you can earn an 8% return over time, perhaps in a portfolio of stocks, versus a 4% return, perhaps in a portfolio of bonds, you would accumulate a much larger nest egg to provide an income stream for you in retirement. The 4% return would grow your $500,000 to $1,095,562 over a 20-year period. The 8% return would grow your $500,000 to $2,330,479 over that same 20 years. That could mean an additional $1,234,917 in this hypothetical illustration. If you were going to take income in the future, that extra $1.23 million would mean: ► Approximately $50,000 extra income per year for the next 25 years Chapter 3: Why Have Growth In Your Portfolio?
