Have you ever wondered how well your savings are doing versus others your age? How soon you started investing may make all the difference.
If you’ve ever wondered how your savings stack up against others your age, consider these numbers: The average amount of money in investments for those between ages 25 and 40 is $25,000. Between 41 and 56, that number increases to $150,000. (Source: 2020 Wells Fargo Retirement Study, October 2020)
One key to hitting those numbers is knowing when to start investing: sooner vs. later.
Text alternative for chart above:
Started investing in 2000: Total value is $50,509
Started investing in 2005: Total value is $31,760
Started investing in 2010: Total value is $18,650
Started investing in 2015: Total value is $8,690
Sources for chart above: Morningstar Direct and Wells Fargo Investment Institute, August 31, 2020. Chart shows the value of $100 invested per month starting in January of the year indicated in a hypothetical portfolio of 50% global fixed income and 50% global equity ending on August 31, 2020. Global equity is represented by the MSCI All Country World Index. Global Fixed Income is represented by the Bloomberg Barclays Multiverse Index. Chart data is hypothetical and provided for illustrative and informational purposes only. Hypothetical and past performance is no guarantee of future results. An index is unmanaged and unavailable for direct investment.
The potential benefit of an early start
Even a five-year delay can make a significant difference in your investment account. The hypothetical results here are based on investing $100 a month, using an investment mix of 50% global fixed income and 50% global equity.
Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of expected return the investment or asset class might achieve. Stock markets, especially foreign markets, are volatile. Stock values may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. Foreign investing has additional risks including those associated with currency fluctuation, political and economic instability, and different accounting standards. These risks are heightened in emerging markets. Bonds are subject to market, interest rate, price, credit/default, liquidity, inflation and other risks. Prices tend to be inversely affected by changes in interest rates.
MSCI All Country World ex USA: The MSCI All Country World ex USA Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the USA. The Index consists of 45 country indices comprising 22 developed and 23 emerging market country indices. The developed market country indices included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom. The emerging market country indices included are: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Bloomberg Barclays Multiverse Index provides a broad-based measure of the international fixed-income bond market. The index represents the union of the Global Aggregate Index and the Global High-Yield Index. In this sense, the term “Multiverse” is used to refer to the concept of multiple universes in a single macro index.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI.