Saturday, March 8, 2008

finance is fun

Who said finance is boring? What is boring is to have bad finances. Only financially successful teens and adults can have real fun. Let us face it more and more things that we call "fun" need to be payed with the hard and cold cash. Now that we established the necessity of financial well being, we can proceed with basics.
Starting early in saving and investing is the key for future fortunes. While it is known that Markets can experience short term blahs, the longer term uptrend is totally indisputable. That is the reason that money invested at the teen age is guaranteed to build into fortune, but money invested at the age of 40's and 50's is not.
Einstein called the compounding the eight wonder of the world, why? because, while the teen grows to adulthood, in the 42 or so years, even a small amount invested will turn into millions. Let us take an example. At the age of 15 teen invests $5000. For 42 years the money yields 10% compounded return. By the rule of 72 this money will double every 7 years(72/10 = 7). For 42 years it would have doubled 6 times. So, at the age of 57 the teen now adult, would have 5000*2**6=5000*64=320000, which is in detail growth..


Into $320000(almost half a million Dollars) thousand dollars, without any further time and money investment! Einstein was right.
If this is not amazing and fun, then I do not know what it is? to see this money growth, instills even more discipline in human beings to stay the course and additional moneys saved adds and grows the nest egg even faster. I would like you to understand these principles. It will make you rich and confident. Would like to hear your comments very much.