Friday, August 20, 2010

TGIF...and the Holy Grail of Investing

I've decided to end this week on a positive note. No more rants until next week!

I want to bring to light what I would consider the HOLY GRAIL of investing...the magic of the Compounding of interest. Ya, ya , ya sounds so boring, I’ll try and make it interesting for you. This alone is how the rich get richer so why can’t our poor souls use it while we are young. We have the luxury of time on our side….don’t squander it!!!

Ladies you remember that last pair of shoes you purchased for around $100 (who am I kidding those are cheap right, but for simplicity I’m sticking with $100). Gentleman, you remember that last time you blew $100 on eating out and a bar tab? Yep every weekend for many....Well if you are 30 years old and placed that $100 in a Roth IRA and earned 10% a year till you were allowed to take it out at age 60.....that $100 is now magically $1,745! Let’s take it a step further if you maxed out your ROTH IRA contributions for the year, which is $5,000….when you retire that 5k is now worth $87,247….holy **** right??? Now just imagine the possibilities when you start throwing larger numbers into the mix.

It doesn’t matter how old you are…it is never too late….20’s, 30’s, 40’s, even 50’s…Make it happen, don’t put it off any longer. I urge you to go through that next week or two, and when you are about to make a big purchase that you really don’t need….look at these Numbers below….This is what you are really spending….That old quote “A penny saved is a penny earned” still holds true…now throw in the compounding of interest on that penny saved and it is how YOU will take care of your financial future.

Say it with me, that pair of shoes just cost me $2,810….that $300 I squandered eating out all month really cost me $8,431….you’ll get the hang of it….might even be fun if your sick like me…

Age

25-   $100 = $2,810
         $200 = $5,620
         $300 = $8,431

30-   $100 = $1,745
        $200 = $3,490
        $300 = $5,235

35-  $100 = $1,083
        $200 = $2,167
        $300 = $3,250

40-  $100 = $673
        $200 = $1,345
        $300 = $2,018

45-  $100 = $418
       $200 = $835
       $300 = $1,235

50-  $100 = $259
        $200 = $519
        $300 = $778

3 comments:

  1. Great..Now Sam is never going to let me buy shoes! :0)

    ReplyDelete
  2. I Love it Harry, keep up the good work. Can you please tell me how much I squander every week on Golf? Or can we think of it as more of an investment. P.S Maybe respond to the gentlemen only so that the ladies don't take our golfing days away... I can hear it now "Do you know how many Manolo Blahnik shoes you could have given me over the years if you weren't WAISTING your money swinging those stupid poles" HA HA Great Friday post my man

    ReplyDelete
  3. Yep no more shoes April...sorry :)

    Our $55 golf round this sunday will cost me $1,161 and your $55 golf round will cost you $1,405....because I'm old

    shoot maybe I should take my own advice....cancel that tee-time!

    ReplyDelete