I’m a bit of a nut about Christmas; I even have a daughter named Noelle. So this time of year can be a bit of downer for me. The tree gets disassembled, the Bing Crosby CDs get packed away, and the holiday cards stop coming. Regarding that last one, however, the void in my mailbox will soon be filled by a different type of tiding — in the form of annual statements from my investment accounts.
OK, so they’re not as jolly as cards with pictures of friends and relatives. But using your year-end statements to give your portfolio a thorough checkup can pay off, especially if you discover ways to increase your chances at higher returns. To see the potential benefit, check out this table, which shows how much $10,000 could amount to, given different rates of return and time periods. As you can see, earning another two percentage points a year can add thousands of dollars to your net worth.
| Annual Return |
5 years |
10 years |
15 years |
20 years |
| 6% |
$13,382 |
$17,908 |
$23,966 |
$32,071 |
| 8% |
$14,693 |
$21,589 |
$31,722 |
$46,696 |
| 10% |
$16,105 |
$25,937 |
$41,772 |
$67,275 |
Alas, you can’t just snap your fingers and pump up your returns. Most investments involve taking on risk, which many people think of as volatility — the ups and downs you’ll experience — but I prefer to think of it as uncertainty, as in you generally don’t know exactly how an investment will perform, which can make things like retirement planning a bit of a challenge.