Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Paolo Wealth Management group of Wells Fargo Advisors. 

Imagine twin sisters, Agatha and Connie. Agatha is aggressive and favors a mostly stock portfolio, while Connie is conservative, and favors a mostly bond portfolio.

Over time, Agatha expects to average 8% return per year on her investments, while Connie expects to receive 4%. Right now, both of them are 30 and each has saved $100,000. Both are in good financial shape today, but what about their retirement years?

We can get an idea from a simple principal: The Rule of 72 says that you can divide any rate of return into 72, and the result will tell you how many years you need to double your money.

So for Conservative Connie, the investment account grows to $200k at age 48 and $400k at age 66, when she plans to retire. Not bad. But, for Aggressive Agatha, the account has doubled twice by the time she reaches age 48 to $400k and twice more by age 66 to $1.6 million. If we assume that each twin can safely pull 4% a year from their investments, Agatha gets to spend $64k per year, while Connie only gets to spend $16k each year in retirement.  

Over a lifetime of investing, taking the right (or wrong) amount of risk can make a huge difference.

We always want to talk with you.  If you feel you know someone who would enjoy this video please feel free to send them the link.

As always stay happy, safe, and healthy and hopefully we will see you very soon.