If you invest today at a young age, the sample results provided by our calculator below, demonstrates how you may prosper tomorrow.
Sample Personal Details
| Age | 20 |
| Annual Income | €24,000 |
| Single Investment / Accumulated Wealth | €10,000 |
| Monthly Investments | €500 |
| Monthly Investments Total | €270,000 |
| Wealth Goal | €1,000,000 |
| Wealth Goal Desired Age | 65 |
| Investment Period | 45 |
| Annual Investment Costs | 1% |
| Your Contribution to Retirement Savings Account | 15% |
| Your Employer’s Contribution to Retirement Savings Account | 10% |
| Annual Retirement Wealth Withdrawals | 3% |
Sample Results for the Buy & Hold Approach
(Note: All € amounts displayed on this page are expressed in terms of today’s money. The actual amounts in the future will be larger as a result of price inflation.)
Table 1: Likelihood of accumulating wealth in excess of your total investment and wealth goal, and of not running out of money by age 100 in retirement.
Table 2: How much wealth you might expect to accumulate by age 65 if you save and invest €500 per month and/or you make a single investment of €10,000 that you have already accumulated.
Table 3: How much you need to save and invest in order to achieve your wealth goal of €1,000,000 with various confidence levels by age 65.
Table 4: Potential wealth outcomes if you want to be 99% confident of achieving your wealth goal of €1,000,000 by age 65.
Table 5: Potential wealth outcomes if you contribute 15% and your employer contributes 10% to your retirement savings account.
Table 6: How much retirement income you might expect if you achieve your wealth goal of €1,000,000 by age 65.
Table 7: How much retirement wealth you might expect to have if you achieve your wealth goal of €1,000,000 by age 65.
Table 8: How much it might cost you if you defer the decision to start saving into your retirement savings account by 10 years, at age 30, rather than age 20.
Table 1
Table 1 below shows you the confidence levels associated with accumulating wealth in excess of the amount you invested and your wealth goal, and of not running out of money in retirement.
| Outcome Description | Confidence Level (%) |
|---|---|
| Buy & Hold | |
| Likelihood of accumulating wealth in excess of your monthly investments total of €270,000 in 45 years time if the annual costs are 1%. | 100% |
| Likelihood of accumulating wealth equal to or greater than your wealth goal of €1,000,000 in 45 years time, assuming monthly investments of €500 and annual costs of 1% per year. | 70% |
| Likelihood of not running out of money by age 100 if you retire at age 65, assuming annual costs of 1% and that you spend a minimum of €30,000 and a maximum of 3% of your accumulated wealth each year. | 100% |
Table 2
Table 2 below shows how much wealth you might expect to accumulate after 45 years if you save and invest €500 per month and/or you make a single investment of €10,000 that you have already accumulated, and you assume annual costs of 1%. It demonstrates that luck can play a significant role in terms of wealth accumulation (see also Factor No.6 ‘Luck’ here). If you save and invest €500 per month using the Buy & Hold investment approach, you can be approximately:
-
- 99% confident that you’d accumulate wealth greater than €612,000
- 75% confident that you’d accumulate wealth in excess of €956,000
- 50% confident that you’d accumulate wealth of €1,213,000 or more
- 25% confident that you’d accumulate wealth greater than €1,656,000
- 1% confident that you’d accumulate wealth in excess of €2,933,000
| Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| Monthly Investments | €612,000 | €956,000 | €1,213,000 | €1,656,000 | €2,933,000 |
| Single Investment | €43,000 | €73,000 | €99,000 | €167,000 | €440,000 |
| Total Investments | €655,000 | €1,029,000 | €1,312,000 | €1,823,000 | €3,373,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 3
One way to mitigate the impact of bad luck is to save more, preferably from a young age, as shown in Table 3 below. It shows you how much you need to save and invest in order to achieve your wealth goal with varying confidence levels depending on how lucky or unlucky you end up being and assuming annual costs of 1%. So, for example, if you use the Buy & Hold investment approach:
-
- If you end up being relatively unlucky, you can be 75% confident of achieving your wealth goal of €1,000,000 if you save and invest €523 per month.
- Likewise, you can be 75% confident of achieving your wealth goal if you make a single investment of €10,000 and invest €485 per month.
- Finally, you can be 75% confident of achieving your wealth goal of €1,000,000 if you make a single investment of €137,000.
| Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| Required Monthly Investments | €816 | €523 | €412 | €302 | €170 |
| Required Monthly Investments with Single Investment of €10,000 | €781 | €485 | €371 | €251 | €95 |
| Required Single Investment | €231,000 | €137,000 | €101,000 | €60,000 | €23,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 4
If you use the Buy & Hold approach and you want to be 99% certain of achieving your wealth goal, even if you end up being very unlucky, you will need to save and invest approx. €816 per month or make a single investment of €231,000, again assuming annual costs of 1%. However, remember that if you invest these amounts, but you actually end up experiencing average luck instead of being very unlucky, then you will actually have accumulated wealth considerably in excess of your goal, as shown in Table 4 below.
So by preparing to be unlucky, but hoping to be lucky, you should be unsurprised by anything in between! Therefore, the more you save and invest and the younger you start, the higher the degree of confidence you’ll have that you’ll achieve your wealth goal or more. In short, where possible, the simple message is to save enough from young enough so that you’re not surprised by lucky or unlucky outcomes and you achieve your wealth goal regardless.
| Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| Monthly Investments | €1,000,000 | €1,561,000 | €1,981,000 | €2,704,000 | €4,790,000 |
| Single Investment | €1,000,000 | €1,683,000 | €2,289,000 | €3,856,000 | €10,175,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 5
Table 5 below shows how much wealth you might expect to accumulate after 45 years if you contribute 15% of your annual income of €24,000 (the average starting salary of a school leaver in Ireland is €24,600 according to a recent study) to your retirement savings account and your employer contributes 10%, and you assume annual costs of 1%. If you use the Buy & Hold investment approach, you can be approximately:
-
- 99% confident that you’d accumulate wealth greater than €612,000
- 75% confident that you’d accumulate wealth in excess of €956,000
- 50% confident that you’d accumulate wealth of €1,213,000 or more
- 25% confident that you’d accumulate wealth beyond €1,656,000
- 1% confident that you’d accumulate wealth over €2,933,000
Your 15% contribution of €300 per month is broken down as follows:
-
- €240 reduction in your monthly net income
- €60 of monthly tax savings
For every €1 you contribute you receive €1.08, so in other words you earn a return on your investment of 108% immediately! Compared to SSIAs where you only received €1 for every €4 you saved, here you receive €4.33 for every €4 you save.
Finally, don’t forget that the amounts shown in Table 5 below could be even larger if:
-
- your income increases over time and you continue to save 15%
- the annual costs of your retirement savings account are less than 1%
| Contributor | Monthly Contribution | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|---|
| Buy | & | Hold | ||||
| Employee | €240 | €294,000 | €459,000 | €582,000 | €795,000 | €1,408,000 |
| Employer | €200 | €245,000 | €382,000 | €485,000 | €662,000 | €1,173,000 |
| Tax Savings | €60 | €73,000 | €115,000 | €146,000 | €199,000 | €352,000 |
| Total | €500 | €612,000 | €956,000 | €1,213,000 | €1,656,000 | €2,933,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 6
Table 6 below shows how much retirement income you might expect if you achieve your wealth goal of €1,000,000 by age 65 and if you continue to invest using the Buy & Hold approach, assuming annual costs of 1%. So, for example:
-
- Even if you’re very unlucky, there’s still a 99% chance that you’ll have annual retirement income of €30,000 at age 100 if you spend 3% of your accumulated wealth each year.
- If you have average luck, there’s a 50% chance that you’ll have annual retirement income of €52,000 at age 100. Hopefully you’ll have the health to match your wealth!
| Age / Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| 65 | €30,000 | €30,000 | €30,000 | €30,000 | €30,000 |
| 80 | €30,000 | `€30,000 | €41,000 | €58,000 | €130,000 |
| 100 | €30,000 | €35,000 | €52,000 | €86,000 | €219,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 7
Table 7 below shows how much retirement wealth you might expect to have if you achieve your wealth goal of €1,000,000 by age 65 and if you continue to invest using the Buy & Hold approach, assuming annual costs of 1%. So, for example:
-
- Even if you’re very unlucky, there’s a 99% chance that you’ll still have wealth of €405,000 at age 100 if you spend 3% of your accumulated wealth each year.
- If you have average luck, there’s a 50% chance that you’ll have wealth in the region of €1,736,000 at age 100.
| Age / Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| 65 | €1,000,000 | €1,000,000 | €1,000,000 | €1,000,000 | €1,000,000 |
| 80 | €329,000 | €792,000 | €1,374,000 | €1,926,000 | €4,346,000 |
| 100 | €405,000 | €1,164,000 | €1,736,000 | €2,870,000 | €7,297,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
Table 8
Finally, Table 8 below shows the potential cost of deferring saving into your retirement savings account until age 30 rather than age 20 as shown above in Table 5.
So, assuming annual investment costs of 1%, deferring your decision to start saving and investing by ten years could cost you over €0.5 million on average using the Buy & Hold approach compared to the extra €28,800 (the €240 monthly employee contribution in Table 5 over ten years) you would have contributed in your twenties.
That’s almost twenty times as much for the Buy & Hold approach. The price of procrastination is very high indeed and at Fair Share Partners we really hope that the current generation of young people decide that they won’t pay that price by starting their retirement savings as soon as they start working.
| Cost / Luck Factor | Very Unlucky | Unlucky | Average | Lucky | Very Lucky |
|---|---|---|---|---|---|
| Buy | & | Hold | |||
| Potential Cost | €364,000 | €454,000 | €563,000 | €775,000 | €1,514,000 |
| Confidence Level (%) | 99% | 75% | 50% | 25% | 1% |
So time and compound interest can be your life long financial friends. We hope the above tables help to remove some of the fear and uncertainty surrounding stock market investments and that they will give you, your children and perhaps even your grandchildren the confidence to save and invest enough from young enough.