Chapter 4 Practice 8 Memo - Investment Strategies

Chapter 4 Practice 8 Memo - Investment Strategies - In...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Investment Strategies, Incorporated Easy Street, Anywhere USA To the New Graduate: Congratulations on your first job. The sooner you begin saving for retirement, the more money you will have. The difference between saving for 35, 40, or 45 years is dramatic as can be seen from the table and chart below. We cannot guarantee the future rate of return, but we can say that 8 percent is a realistic expectation, given an investment in a stock market index over an extended period of time. A more conservative investment such as government bonds can be expected to yield 6 percent. The “time in the market” is much more important than any attempt to “time the market”.
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: In other words, the longer you are invested, the better. Investing for 45 years at 8 percent, for example, yields almost $100,000 more than investing for 35 years at 11 percent. Eight percent is a much more conservative estimate, and you will be able to sleep more easily, without the worry of a volatile market. One last piece of advice would be to pay yourself first. Your paycheck will show multiple deductions for federal income tax, Social Security tax, various insurances, and so on. Why not add an automatic deduction to a retirement plan? We look forward to hearing from you. Bob and Maryann...
View Full Document

Ask a homework question - tutors are online