A random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing

3. Persistent Saving in Regular
Amounts, No Matter How Small,
Pays Off
One final preliminary before presenting the asset-
allocation guide. What do you do if right now you have no
assets to allocate? So many people of limited means believe
that it is impossible to build up a sizable nest egg.
Accumulating meaningful amounts of retirement savings often
seems out of reach. Don’t despair. The fact is that a program
of regular saving each week—persistently followed, as
through a payroll savings or 401(k) retirement plan—can in
time produce substantial sums of money. Can you afford to
put aside $23 per week? Or $11.50 per week? If you can, the
possibility of eventually accumulating a large retirement fund
is easily attainable if you have many working years ahead of
you.

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The table below shows the results from a regular savings
program of $100 per month. An interest rate of 8 percent is
assumed as an investment rate. The last column of the table
shows the total values that will be accumulated over various
time periods.
*
It is clear that regular savings of even moderate
amounts make the attainment of meaningful sums of money
entirely possible, even for those who start off with no nest
egg at all. If you can put a few thousand dollars into the
savings fund to begin with, the final sum will be increased
significantly.
HOW RETIREMENT FUNDS CAN BUILD: WHAT
HAPPENS TO AN INVESTMENT OF $100 A MONTH,
EARNING AN 8 PERCENT RETURN COMPOUNDED
MONTHLY

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If you are able to save only $50 per month—only about
$11.50 per week—cut the numbers in the table in half; if you
can save $200 per month, double them. Pick no-load mutual
funds to accumulate your nest egg because direct investments
of small sums of money can be prohibitively expensive. Also,
mutual funds permit automatic reinvestment of interest, or
dividends and capital gains, as is assumed in the table.
Finally, make sure you check whether your employer has a
matched savings plan. Obviously, if by saving through a
company-sponsored retirement plan you are able to match
your savings with company contributions and gain tax

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deductions as well, your nest egg will grow that much faster.