Three Ways to Boost Your Investment Returns

If you read Part One and Part Two of our series on boosting your income, you may be making and hanging on to more money.

The next step is growing the money you've got.

Kicking up your returns by a percentage point or two can brighten your financial outlook, big-time. For example, let's say you invest $500 per month in a 401(k), with a 3% employer match. If your investments generate a 7% average annual return, you'll have $882,049 in 30 years. Juice your returns to 9%, and you'll end up with $1,285,785 -- an increase of more than $400,000.

The extra money could make an enormous difference in your retirement income. A $1.29 million nest egg would allow $51,000 in inflation-adjusted annual withdrawals, assuming you take financial advisers' standard advice and withdraw 4% of your retirement savings each year. (Myriad studies have found that a 4% maximum withdrawal rate gives retirement savings the best chance of lasting at least 30 years.)

By comparison, the $882,000 portfolio would allow annual withdrawals of just $35,000. (You can run your own calculations here.)

"You often hear how a dollar saved today can make a big difference tomorrow," says Rick Shapiro, a managing member of Investment and Financial Counselors in West Hartford, Conn. "That's true for every dollar your portfolio earns, too."