Investment Strategies, Incorporated
Easy Street, Anywhere USA
To the New Graduate (your name goes here):
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 7 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 table below shows the
value of a Roth IRA with an annual contribution of $3,000 at different interest rates. The
information is shown graphically on the next page.
The “time in the market” is much more important than any attempt to “time the market”.
In other words, the longer you are invested, the better. Investing for 45 years at 7 percent,
for example, yields $200,000 more than investing for 35 years at 9 percent. Seven 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?
Sincerely,
Your investment advisors
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