A Thought Experiment: Comparing 4% vs. 8% Investment Returns Over a 20-Year Period 3

This little thought experiment proves an important point: A high savings rate can often offset sub-par investment returns. While it’s impossible to predict what type of returns the market will provide in the future, it’s possible to make up for mediocre returns through maintaining a high savings rate.

Related: A Timely Bond ETF for Current Rate Environment

Note: I was able to find equivalent combinations of savings and investment returns by using this tool: The Equivalent Savings Plan calculator

My favorite free financial tool I use is Personal Capital. I use it to track my net worth, manage my spending, and keep an eye on my monthly cash flow. It only takes a few minutes to set up and it makes tracking your finances simple and easy. I recommend trying it out.

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