Make $384,000 more

There is a simple mistake that can cost you $384,000, but is easy to avoid. That mistake is not being aggressive enough with your investment savings.

You see, while I often preach about being conservative and not too greedy, there are many people who are too careful.

A certain level of risk and aggression in your investment portfolio is required to reach full growth potential.

The stock market is no doubt volatile.

The S&P 500 saw 27 downturns of 10 per cent or more between 1965 and 2015.

But here’s the thing, it ultimately recovered from each and every one of them.

If you simply can’t weather the downturns and pull your money out during each one, then the stock market may not be for you.

But, if you can truly take a long-term investment view and stick to your plan, there is an awful lot of upside potential. Let’s take a closer look. Assuming a $500 per month contribution over the 30 years of your working career, how much can you expect to accumulate? Conservative portfolio Comprised mostly of fixed income, this portfolio would net you $349,970, based on four per cent annum growth. Moderate portfolio This portfolio will have a mix of stocks and bonds and would reach $502,810, based on an average six per cent yearly growth. Aggressive portfolio Invested entirely in stocks, this investment strategy could grow to $734,075, assuming an average eight per cent annual growth.

If you limit yourself to the more conservative portfolio and achieve the four per cent yearly growth rate, you would be missing out on $384,105 of extra assets to use in your retirement.

And, believe me, your retirement will likely cost a lot more than you think, so that extra cash will be much appreciated.

The key here is I’m suggesting being more aggressive, not downright greedy or foolish.

The reason so many investors achieve low returns or even lose much of what they put in is they attempt to earn even higher returns, north of 10 per cent a year.

They put money is real estate investments scams, risky resource plays and long-shot startups with only a slight chance of hitting it big.

By being more aggressive, I’m talking only about reducing your fixed income allocations and instead being more fully invested in a well-diversified and stable basket of stocks from sound companies with proven records.

It is easy to adopt a conservative investment strategy and resign yourself to limited growth in your nvestments.

But, that move could really end up hurting you in the long run, to the tune of $384,105.

While investing in the stock market may seem too risky for you, consider the risk of not having enough money to fund your retirement.