Dribs and Drabs Can Really Add Up
You've got to get over the hump.
When you strip away all the nonsense, amassing wealth comes down to two key strategies. First, you have to spend less than you earn, so you have money to save. Second, your investments have to outpace the triple threat of investment costs, taxes and inflation, so you clock a real rate of return.
But here's what intrigues me: In both cases, there's enormous leverage involved.
If you can cut your spending just a little or bolster your portfolio's real return ever so slightly, you can make startling financial progress.
Saving Yourself
Suppose your family pulls in $3,000 a month after all taxes. You are fairly careful with your money, limiting your spending to $2,800 and saving the other $200.
Want to do better? It doesn't take much to sharply increase your family's savings rate. If you can trim your $2,800 monthly expenses by just $200, or 7%, you would boost your savings by 100%, to $400. In other words, you can leverage a small spending cut into a huge savings increase.
To cut spending, maybe you can refinance your mortgage. Maybe you can raise the deductibles on your auto and homeowner's insurance. Maybe you can eat out less. Maybe you can quickly pay off car loans, credit-card debts and student loans. Once you get rid of these debts, you can then take the money that used to be earmarked for monthly debt payments and redirect it into savings.
Alternatively, maybe you can boost your income by working overtime or moonlighting. If you earn a little extra income, it could mean a huge increase in your savings rate, provided you don't let your spending drift upward along with your income.
Whether you boost income or cut spending, you want to reach the point where your earnings far exceed your spending. Many people don't make this financial breakthrough until their late 40s or early 50s, when the mortgage gets paid off and the kids are finally through college.
Suddenly, with these two huge expenses out of the way, folks find they are spewing cash like an ATM. Their savings rate soars and they rapidly build their retirement nest egg.
It's great when you reach this point. But it would be even better if you got there earlier.
The fact is, it isn't easy to amass a decent-size retirement nest egg over the last 15 or 20 years of your career. Moreover, your opportunity to save like crazy may get snatched away. What if your employer pushes you into a premature retirement? Instead of the golden years you imagined, you could face a lifetime of penny pinching.
Getting Real
If you start seriously saving in your 20s, 30s and 40s, you won't just reduce financial stress, by avoiding the need to save great gobs of money in your 50s and 60s. There's also the chance you will get heaps of help from the financial markets.
But the emphasis here is on the word "chance." I strongly suspect many investors earn little or no money on their investments, once they figure in the drag from investment costs, taxes and inflation.
Suppose you buy a money-market fund that yields 1%. If you surrender 25% to taxes and inflation then knocks off another two percentage points, your money will lose spending power at the rate of 1.25% a year.
What if you took more risk, by buying stock and bond funds? Assume your stock funds score a raw return of 7% a year, while your bond funds notch 5%.
In addition, let's assume your stock funds lose two percentage points a year to fund expenses and trading costs, while your bond funds lose one percentage point to costs. Taxes then take 25% of what's left and inflation steals another two percentage points. Result: You will be left earning a miserable 1.75% a year on your stock funds and a meager 1% on your bond funds.
To be sure, you can't do anything about the inflation rate. But you can control investment costs and taxes.
Let's say you favor market-tracking stock-index funds and low-cost bond funds, so you lose just 0.3 percentage point a year to investment costs. At the same time, you make full use of tax-sheltered retirement accounts. With these retirement accounts, you can get tax-free growth. That's clearly the case with Roth individual retirement accounts, where all withdrawals in retirement are tax-free.
But you can also end up with tax-free growth from a 401(k) plan or a tax-deductible IRA. Suppose you stash $1,000 in one of these accounts and you are in the 25% federal income-tax bracket. Thanks to the initial tax deduction, Uncle Sam effectively contributes $250 to the account, while your investment is just $750.
Now, consider what happens when you withdraw money in retirement and pay the taxes owed. If you are still in the 25% tax bracket, you are simply giving Uncle Sam back his 25% share. In effect, the initial tax deduction paid for the final tax bill, leaving you with tax-free growth.
So what happens to your results if you get tax-free growth and lose just 0.3 percentage point a year to costs? Instead of garnering a slim 1% a year, your bond funds will climb 2.7% annually.
Meanwhile, your annual stock-fund return, after subtracting inflation, jumps to 4.7%, from 1.75%. Over 30 years, a 4.7% annual return will turn $10,000 into $39,664. But at 1.75%, you will amass just $16,828.
Once again, it's leverage at work. It may be tough to get over the hurdle of investment costs, taxes and inflation. But once you get over that hurdle, it's all gravy.
Problem is, amid the noise of the markets, it is hard to get folks focused on saving more, cutting costs and trimming taxes.
"The difference in any one year is minor," concedes William Bernstein, an investment adviser in North Bend, Ore. "But that small difference compounds over time. Eventually, it can make the difference between the south of France and cat food."
理财之道，积水成渊
你必须为自己攒笔钱。
不管别人怎么说的天花乱坠，积累财富只有两种可行的办法。第一，不能花得比挣得多，这样才有钱可攒。第二，你的投资收益要能弥补投资成本、纳税以及通货膨胀影响，即获得实际的投资回报。
无论哪种方法，都让我意识到强大的杠杆效应。
只要少花一点，或是投资收益再多一点，你的财富就会有出人意料的增长。
比方说，你的家庭收入是每月税后3,000美元。你过日子很仔细，每个月的花费都不超过2,800美元，另外200美元就攒下了。
想不想攒得更多？这并不需要你大幅增加收入中的储蓄比例。只要你从每个月2,800美元的花销中再节省200美元出来，你的月储蓄额就达到400美元。看，你只是少花了7%，储蓄就增长了100%。换句话说，杠杆效应令你只要削减一点点支出就能大幅提高储蓄额。
要想削减支出，你或许可以尝试将抵押贷款再融资、提高汽车和房屋保险中的自付额。少出去吃几顿饭。你还可以快点还清汽车贷款，信用卡债务或是学生贷款。只要你把这些债务处理干净，那你就可以把原本每个月用来还债的钱也马上攒起来。
或者，你可以通过加班，在夜间干些兼职来增加收入。只要你的花费不会随著收入的增加水涨船高，那稍微多一点收入，你的储蓄就能大幅增长。
不管是多挣钱还少花钱，目的都是想让收入大大超出你的花销。很多人直到四十岁末和五十出头才达到这种状态，因为那时抵押贷款已经还清了，孩子们也都大学毕了业。
一旦没有了这两项金额最大的支出，人们马上就发现手中现金多得像往外冒钱的自动提款机。储蓄比率大幅增长，很快就能攒出自己的退休金。
到那时一切就好了。不过，越早达到这个水平岂不更好？
事实上，要想在退休前的15到20年内攒出一笔可观的养老金可并不容易。而且，那时让你疯狂攒钱的机会也没有多少了。如果你的老板让你提前退休怎么办？那你的美好的计划就全落空了，你剩余的人生恐怕就得紧巴巴地过日子了。
如果你20多岁、30多岁和40多岁就在小心翼翼地攒钱，那你就不会面临财务紧张的困窘，也不用五、六十岁了还得拼命赚养老金。另外，你还有机会在金融市场中有些收获。
但我在这儿强调的是"机会"。如果将投资成本、纳税额和物价上涨因素考虑进来，我非常怀疑很多投资者是否能有真正的投资收益。
假设你购买了年收益率为1%的货币市场基金。收益的25%要用来纳税，通货膨胀率是2%。这样一来，你的金钱的购买力每年下降了1.25%。
如果你承担更大风险买了股票和债券基金，情形又会怎样？假如股票基金的毛收益率每年为7%，债券基金为5%。
我们还假设股票基金的回报中要有2%用于支付基金管理费和交易成本，债券基金也要为此支付1%。税率还是25%，通货膨胀率为2%。那最后的结果是：你的股票基金的投资回报率每年只有可伶的1.75%，债券基金为1%。
你肯定无法阻止物价的上扬，但你可以控制自己的投资成本和纳税额。
如果你喜欢投资追踪大市的指数基金和低成本的债券基金，那你每年的投资成本就只有0.3%。与此同时，你还可以动用免税的退休金帐户的资金进行投资。这样你的投资收益就能够免予纳税了。
这样一来，你投资债券基金的年回报率就从可伶的1%增长到2.7%。
与此同时，刨除物价上涨因素后你的股票基金的年回报率也会大幅上升至4.7%，高于原来的1.75%。30年后，每年4.7%的回报率能使10,000美元的初始投资增值到39,664美元；但1.75%的回报率只能增值到16,828美元。
再次强调，还是杠杆发挥作用。要想能弥补投资成本、税收和通货膨胀获得真正的回报恐怕并不容易。但只要能够实现，你的财富就会增值了。
但由于市场中的种种其他因素，人们很难专注于省钱、节约成本和尽量避税。
俄勒冈州North Bend的投资顾问威廉?伯恩斯坦(William Bernstein)说，这样做每年多获得的收益可能并不显著，但这多出的部分会继续以复利增长下去，多年以后就不是一笔小数目了。最终，日积月累会使你的财富在多年后有天壤之别。
