Your Money Matters: Simply Saving More Can Boost Returns
In the 1980s, when double-digit returns were easy to come by, many investors lost sight of one of the simplest, safest ways to increase their money -- by saving it.</br></br>"Rather than chasing some ephemeral return, individuals can often do better if they just save a little more money in the first place," says John Bogle, chairman of Vanguard Group, the mutual-fund giant in Valley Forge, Pa.</br></br>For instance, a family with $10,000 in a money-market mutual fund earning 3.7% would have $10,376 a year from now, assuming today's yields remained constant. But if they managed to squirrel away as little as $25 a week and add it to that money fund, their total stash of cash at the end of a year would be $11,497 -- equivalent to boosting the return on the original $10,000 to about 15%.</br></br>Comparisons like this fly in the face of the way many people approach personal finance, looking on saving and investing as separate activities. "People have `either/or' thinking," says Mr. Bogle.</br></br>But if individuals begin to think more like companies do -- that is, to look at the whole cash-flow picture -- they won't be so dismayed by low rates and can find creative ways to boost their returns and increase their wealth.