Monday, January 11, 2010

Getting a higher rate of return matters

As you go up with rates, it makes a huge difference.

Over the course of 50 years, you can make this much more over earnings at 5%:
$7 more at 6%
$18 more at 7% ($11 increment)
$35 more at 8% ($17 increment)
$63 more at 9% ($28 increment!!!)

The earnings more than double at just 1 percent more in return!
That is SO crazy.
I think that's why finding alpha is so worth it for wealthy people.