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Savings Amount Trumps Return Rate; Fund Choice Secondary; Investing early and big can be keys to boosting your account balance.(FUNDS & PERSONAL FINANCE)

Investor's Business Daily

| August 01, 2005 | COPYRIGHT 2005 Investor's Business Daily, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Byline: MURRAY COLEMAN

Choosing a good fund is crucial to building your nest egg.

But consider a more important step.

Pay yourself first. Contributing to your favorite mutual funds shouldn't be optional. "Treat it as a requirement, like a utility bill or an installment on a loan," said Fran Kinniry, a senior manager at Vanguard Group's investment counseling and research unit.

How much you're able to sock away early in your investment life is the key to building your account, says money manager Rick Ferri, author of "Protecting Your Wealth In Good Times and Bad."

In his book, Ferri compares a hypothetical pair of 22-year-olds just entering the work force. Both start with salaries of $24,000 a year. And each gets a 3% yearly average pay increase.

One of them puts 5% of his paycheck into a fund with an average annual return of 10%. The other one contributes twice as much. Also, the second investor goes with a more conservative type of fund. It averages a 5% total annual return.

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