Three Ways to Boost Your Investment Returns

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."

Here's how to maximize your investment returns:

Cut ExpensesEvery dollar spent managing your money is a dollar missed, not just from today's balance but from tomorrow's growth -- so cutting costs can have a major impact on your returns.

Say you invest $20,000 in an actively managed, no-load stock fund that earns the stock-market average of 11% per year for 10 years. A 1.5% expense ratio would force you to forgo nearly $8,000 in fees and lost earnings, leaving your investment worth $48,823 after a decade. Lower your expense ratio to 0.25% -- for example, by investing through an index fund -- and your costs would shrink to about $1,400, boosting the value of your investment in 10 years to $55,385.

The Securities and Exchange Commission has a calculator that enables you to compare funds and see how their expense ratios might affect your portfolio over time.

Spice Up Your Portfolio In general, the more risk you're willing to take, the higher your returns will be over the long run. Goosing your stock allocation even a bit might help you amass a good deal more money over time.