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Online Resources |
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Use our Mocha Mistake Calculator to help
you calculate how small changes in your spending habits
can add up to significant investments. |
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Investing should be something you do at every stage of
your life. One rule of thumb is to set aside 10% to 15% of
what you make. However, this figure will vary depending
on your goals, age, income, expenses, and more. If that
sounds like too much, it may be a matter of thinking of it
differently. Consider the "mocha mistake" and how cutting
out the stop at the coffeehouse could leave you with $5
a day ($35 a week) to invest. The diagram below illustrates
how this really adds up.
If you're starting late, all hope is not lost. You simply need
to pay yourself more – and you need to start today. It's
not going to happen magically. One way to start is by
eliminating some of your expenses.
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What's your mocha mistake costing you? |
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Invest $5 a day (the price of a mocha and a muffin) x 30 days a month
= $150. With a hypothetical annual return of 8%, here's what an investor
would wind up with:
| 1 year = |
$1,906 |
That's an expensive 40
years of mochas! Imagine
the difference this could
make toward reaching an
investment goal.
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| 5 years = |
$11,247 |
| 10 years = |
$28,004 |
| 20 years = |
$90,162 |
| 40 years = |
$534,371 |
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Put time
on your side.
Time is a powerful ally that can help your investments
grow significantly beyond the amount you actually invest.
Compounding the growth of your earnings occurs as you
continually reinvest your returns and those returns earn
their own returns, and so on. Start now and put the power
of compounding on your side so that you may reach your
goals faster.
Age Contributions Begin |
Annual
Contribution |
Years
Contributed |
Total
Contributions |
Total Accumulation
at Age 65 |
25 |
$10,000 |
10 |
$100,000 |
$1,740,333 |
| 45 |
$10,000 |
20 |
$200,000 |
$512,380 |
This hypothetical illustration demonstrates the power of starting early and contributing often. The scenario depicts
how an investor at age 25 can contribute $10,000 a year for 10 years ($100,000 in total) and amass much greater
wealth than someone who waits until age 45 and begins contributing $10,000 a year for 20 years ($200,000 in
total). The illustration assumes an 8% annual rate of return, compounded monthly. This example does not predict
or guarantee the performance of any Wells Fargo Advantage Fund.
 Next: No matter how much you decide
to invest, do it automatically
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