Save Early, Retire Early

Chart of the Week for November 11-17, 1999

Investors who begin saving early earn the greatest advantage from compounding. Compounding is a method of interest calculation where, in each period, interest is calculated on both the principal and interest previously accrued. An investor who contributes $2,000 annually will have an ending balance of $98,846 after twenty years, assuming an 8% rate of return. After thirty years with the same level of contributions, the account value would be $244,692. Those additional ten years allowed the portfolio to increase by nearly 150%. The numbers can become substantially larger when annual contributions are increased using the same earnings assumptions.

The table below illustrates how time is the investor’s greatest tool. After 10 years, two-thirds of the dollars in the account are from contributions. But after 30 years, contributed dollars are just 25% of the account balance— the rest is from earnings.

* This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing. Past performance does not guarantee future results. Investment returns and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 1-800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240, or by visiting www.icmarc.org. Please consult both the current Vantagepoint Funds prospectus and MAKING SOUND INVESTMENT DECISIONS: A Retirement Investment Guide carefully for a complete summary of all fees, expenses, charges, financial highlights and investment objectives, risks and performance information prior to investing any money. Vantagepoint securities are distributed by ICMA-RC Services LLC, a broker dealer affiliate of ICMA-RC, member NASD/SIPC. For a current prospectus, contact ICMA-RC Services LLC, 777 North Capitol Street NE, Washington, DC 20002-4240. 1-800-669-7400.