Do You Have Wealth Accumulation Goals?

Wealth Accumulation

You might be asking yourself, “What the heck is a wealth accumulation goal”?  Let’s get that question clearly answered before we move on with the rest of the article.  Having a wealth accumulation goal is basically a savings plan that has a very specific end goal in mind.  It could be a short-term goal like in 5 years I want to buy a new boat for my family, or it could be a longer-term goal like in 20 years from now I want to purchase a vacation home.  Either way, it’s all about assigning a specific dollar amount to a specific goal in a specific timeline.

Lets take a look at hypothetical scenario for our hypothetical family, The Steward’s.  Mr. & Mrs. Steward would love to be able to buy a vacation home for their family.  They want to save a total of $100k to use to buy the home.  They create a goal of saving $1,000 a year for 20 years in a savings plan earning 7% interest.  Will this plan allow them to achieve their goal?  Lets take a look!

wealth accumulation 20 years
As you can see, with this plan, they are going to come up well short of their goal with only $43,865 dollars saved over 20 years. So are the Steward’s going to have to more than double their annual contributions to reach their goals? Let’s see what some small changes to their plan does.
Instead of $1000 a year, they will contribute $1200 (a 20% increase). Instead of 20 years, they will add an additional 4 years (also a 20% increase). They reallocate their accounts so they earn 8% instead of 7%, and they reduce their overall goal from $100k to $85k. Let’s see what happens.
They made it! With only 4 additional years, and $200 more a year or $17 a month, they were able to save just over $85k and now their vacation home can become a vacation reality!
Do you have a wealth accumulation goal established? If not, we encourage you to get started, even if it’s on something small. Seeing your money working for you, rather than you working for your money, can be an extremely rewarding and beneficial experience.

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