Howdy,
Well, in the early days of one's retirement plan via IRA, 401k, 403b or related; it may be difficult to initially appreciate a rate of return on your money, when the balance is $2,000. Presuming a first, one year return of 8% on the money, $160 does not seem like much for most folks.
The years roll past, and a working couple has managed to provide for a family and living within their incomes from their excellent budgeting skills; allowing them to continue to set aside monies into retirement funds.
They maintained their positive investment emotions over the years, even when the investment markets had a few rough periods. They did/do monitor their investments, but were not frequent with moving money here and there. They actually enjoy this monitoring, as it is also an ongoing educational experience.
Jumping forward to retirement period.
We find their investible retirement savings to be exactly $500,000 on March 9, 2009.
They decided, within their rollover IRA accounts, to have a moderate, U.S. centered investment allocation starting with a most simple plan. VTI and BND would have 50% of the monies allocated to each fund. They would monitor these choices and make adjustments as needed, based upon the results.
The combined annualized return between these 2 funds over the past 6 years is about 10%.
The numbers: March 2009 - March 2015
--- 1st year, + $50,000 gain
--- 2nd year, + $55,000 gain
--- 3rd year, + $60,500 gain
--- 4th year, + $66,550 gain
--- 5th year, + $73,205 gain
--- 6th year, + $80,525 gain
Total current value = $885,780
Total current gain over the 6 year period = $385,780
They calculated the following fun excercise regarding their invested monies versus their time; another very precious commodity. They were curious with their time spent to monitor and perhaps take any actions with their investment holdings; as to what this would mean in terms of an hourly rate of pay for their efforts.
Upon review, this couple determined they spend an average of 20 hours per week with investment business information; in written and television form. Keeping in mind that they don't really consider this a chore, as they both enjoy keeping up to date and informed.
Twenty hours a week of time becomes 1,040 hours a year. With this in place, the following numbers were determined as to an hourly rate of pay:
--- 1st year = $48/hour
--- 2nd year = $53/hour
--- 3rd year = $58/hour
--- 4th year = $64/hour
--- 5th year = $70/hour
--- 6th year = $77/hour
Overall average of the 6 years = $62/hour
Obviously, they found these numbers quite pleasing; and more than any hourly pay rate they had received during their working careers.
Well, another view; at least for this house, as to the value of saving and investing; and how it relates in the long run, to a part-time, post-retirement pay scale for working from the comfort of your own home.
Hoping your hourly pay rate for the time spent monitoring and educating yourself for now or the future, to help your investments grow properly, into enough Assets Under Management; that you are well rewarded for your efforts.
All numbers should be accurate. Please let me know if the math has a problem, as I can always blame the HP-12C calculator.
Take care,
Catch
Comments
The hours of "research" is merely a baseline for the numbers.
'Course, if only 52 hours/year (1hr/week) were used for "research"; the hourly rate
of pay would be just amazing, eh? But, this wouldn't allow for enough time with MFO !!!
And yes, for all of our portfolios; tis always "do'in alright, so far....."