When I was a child, my Dad created an amazing Lionel train layout in our basement. My brother Russell and I spent hours playing with that train set. I was reminded of this when I read an AAII article this morning about the Engines of Growth in your investment approach.

There are two engines of growth in an investment portfolio:

1) the contributions made by the investor, and

2) the rate of return generated by the portfolio itself.

The question is this: Which has the greater impact?

 The answer is: It depends on your age. The foolish approach for retirement income preparation is to wait until you are age 45-55 to start to set aside funds. You must take more risks or have very little to show for the effort if you don’t. You will still end up with far less than if you had started at age 25. I started at about age 26.

The ant starts saving for winter as soon as the weather allows. It doesn’t wait until the middle of October to gather and store for the cold months.

Proverbs 6:6 “Go to the ant, O sluggard; consider her ways, and be wise.”

From AAII article – see link below

http://www.aaii.com/journal/article/the-impact-of-saving-versus-return-on-wealth