What can you do to increase your portfolio's value? Keep in mind that your portfolio's value is dependent on four factors:

1. How much you save.
2. How long you invest.
3. How much you earn on your investments.
4. How much is paid in investment costs and taxes.
    

Some strategies to consider include:

Save more. Many individuals find that their living expenses are equal to or exceed their income, providing little cushion if income or bonuses decrease. If you're looking for ways to increase your portfolio's value, seriously look at your lifestyle choices to see if you can find ways to reduce spending so you can increase savings. Even modest changes in the amount invested can dramatically affect your portfolio's value.

Consider the example of a 35-year-old who is deciding between investing six percent ($3,000) or eight percent ($4,000) of his $50,000 salary. If he earns eight percent compounded annually, at age 65 his portfolio would equal $339,850 with six percent contributions and $453,133 with eight percent contributions. Each two  percent increase in investing would mean additional contributions of $30,000 over 30 years, but would increase the ending value by $113,383.*

Invest sooner. Don't put off investing, waiting until you have more money to invest. One of the more potent factors for increasing your portfolio's value is time.

Consider the following example. Four individuals, ages 20, 30, 40, and 50, each invest $5,000 this year. What will that balance equal when each individual reaches age 65, assuming an eight  percent annual return? The 50-year-old would have $15,861, the 40-year-old would have $34,242, the 30-year-old would have $73,927, and the 20-year-old would have $159,602. Even though all four invested the same amount, the 20-year-old would have a much higher balance due to the compounding of earnings for those additional years.*

Invest in a tax-efficient manner. Using strategies that defer the payment of taxes for as long as possible can make a substantial difference in your portfolio's ultimate size. Consider strategies such as utilizing tax-deferred investment vehicles, like 401(k) plans and individual retirement accounts, emphasizing investments that generate capital gains rather than ordinary income, and minimizing turnover in your portfolio.

* Examples are provided for illustrative purposes only and are not intended to project the performance of a specific investment. They do not consider the payment of commissions or any taxes that may be due.