| |
| |
|
|
|
|
|
|
Time is Money and We Are Running Out of Both!
One of the fundamental principles of finance is the concept that $1 today is more valuable than $1 a year from now. Making adjustments for inflation, the dollar will buy less goods and services next year. But I can invest that dollar today and earn a ROI (Return On Investment) in the form of dividends, interest or capital gains. The best money advice anyone can ever give you is to firmly establish this time value of money concept in your head. The key to financial prosperity is realizing the potential value of every dollar that comes into your hands. In fact, I think of cash as a seed - you can either eat it (spend it) or invest it (sow it). If you find a $20 bill on the side of the road you can run and put this money in your supposedly tax-free retirement account or buy dinner. But if you use the time value of money formula, you will discover that you actually spent $140.00 Calculate the real economic cost of not investing that cash or having enough income to invest. FV = pmt (1+i)n To perform the calculation, we make a few assumptions. *We assume you are 30 years old (and hence 35 years away from retiring at 65). That means that the $20 can compound for 35 years. We will substitute 35 for "n" in the equation. *Next, we must establish your expected rate of return. Historically, the stock market has returned 12%. If you want to invest in bonds, your return will be lower. Assume that you invest in a combination of both and expect to earn a 10% rate of return. This will be substituted for the "i" variable in our equation. The "pmt", or payment, is the value of the single amount you want to invest (in this case $20). Now that we've figured out the variables, the formula looks like this: **FV = $20 (1+.10)35 Enter 1.10 into your calculator (this is the sum of 1+.10). **Raise this to the 35th power. **The result is 28.1024. **Multiply the 28.1024 by the pmt of $20. The result ($562 and change) is the true cost of spending the $20 today (if you adjusted the $562 for inflation, it would probably work out to about $140 in today's dollars. That means your real purchasing power would increase approximately 7-fold). Once you understand this concept of time value as it refers to money it becomes obvious that the trips to MacDonald's costs you millions and millions of dollars in future wealth. Then you must expand your reach to get to your financial goals. Find a home-based business that will make you money. You can create multiple streams of income to help fund your new home, car and retirement. By increasing your income and investing extra money you can maintain your standard of living while still providing extra cash for the long and short term. Virginia R. Sanders is a graduate of the University of Texas in Arlington, Texas. She is the mother of twin daughters, and grandmother to a rambunctious 7-year-old genius named Gary. Virginia was born in Fort Worth, Texas but now lives in Sacramento, CA. Virginia states that she decided to go full-time in affiliate programs when her grandson asked her the fateful question "Nana, Are You Fixed Yet" Virginia plowed head strong into affiliate marketing starting with The Cash Mall Concept whose flagship product is the CBMall http://www.thecash-mall-concept.com as a cash generator so she could start investing in real estate. ==============================================================
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Success Trading for New Traders: What Does Bid and Ask Mean? Do you ever wonder exactly what's going on in the trading pits after you've sent an order to purchase stock? You've no doubt seen market quotes either online or even in the newspaper. Have you noticed that there are always two sets of prices given? What exactly do those mean and where will my order get filled? Let's discuss the basics of the two prices you see. Bad News - Why The Financial News Media Can Cost You Money! The communication innovations we have around us today like the internet, financial newspapers, and special interest television channels focused on investing like CNBC are a high speed pipeline of nonsensical chatter. All these sources of information mean that there is no shortage of media people trying to answer our questions about the stock market and specific stocks. Seecrets on Investment: Tired of Making Huge Losses in the Stock Market - Part 1 Over 80% of all individual investors lose money in any given span of ten years. This figure is likely to be higher, given most people's reluctance to reveal their losses. Rolling your 401k: Contributory IRA vs. Rollover IRA In an ideal world you would start your working career with a great company in your early 20s, steadily climb the corporate ladder, retire at age 65, and draw a sufficient income from your accumulated 401k account to live happily ever after.Unfortunately, that's not how the real world works. Copy Cat or How to Use a Successful Trading System How many books have you read about successful traders? How they did this or that and made a fortune and are still doing it. You say to yourself, "I'm going to follow his method and get rich". Discipline in Trading and Investing The one thing I can think of that most affects both trading and investing has to be self-discipline.Being disciplined is fully 50% of the job of trading or of investing. Planning for Retirement Almost without exception, people don't start planning for their retirement early enough in their lives. Young people leaving High School or College and going into their first paid position find it difficult to look or see ahead to age sixty or sixty-five. Have You Ever Seen A Map of the World Turned Upside Down? For those accustomed to viewing things a certain way, it is quite disconcerting. One almost expects the ocean to pour out. Straddle Strategies in Option Trading The straddle strategy is an option strategy that's based on buying both a call and put of a stock. Note that there are various forms of straddles, but we will only be covering the basic straddle strategy. My Way Or The Highway: Give Your Financial Professionals A Good Talking To! All this talk about Investing is encouraging lately. Over the last few years, more people have become interested in the duty to invest there money, then ever before. Why the Rich Keep Getting Richer Rich people: fortunate, lucky, selfish, and arrogant? Or highly educated, caring, brilliant individuals? Becoming rich isn't hard, but it does require a bit of time and knowledge. Having time to get rich, educating oneself, and buying assets are the three key factors in attaining untold wealth. Dumb Money Many people have, at one time or another, taken some of their hard-earned funds, and decided to put them in the stock market. These well-meaning individuals either acted on a tip they saw on CNBC, or actually believed one of those crazy faxes/emails that said XBXB @ $0. Buying a Home - Your BIGGEST Investment This column has often focused on intangible investments like stocks that a young investor might hold in their portfolio. While these are one of the most important components of an investment plan, it is not the dominant one for most young people. When NOT to Invest Unfortunately, many investors who are seduced by the lure of easy money try to become "active" investors before they have the skills, the resources, or the appropriate intellectual framework to do so.This is not to say that investing in stocks is extraordinarily difficult . Options Education : Opinion versus Fact! The most basic aspect of trading is learning to differentiate between what is FACTUAL and what is OPINION. If you stay interested in the financial markets long enough you will discover that there are a lot of sharks out there who have become expert at making that task very difficult. How to Analyze the Veracity of Investment Newsletters When trying to analyze whether a promotional ad for an investment newsletter or a market timing investment trading system is worthy of investigation, the following questions should be asked:Does the strategy have a track record? Without this you are really allowing your emotions to be in play. All of us want to believe that if someone says something it must be true. Approaches to Investing Here is a small summary of the three major approaches to investing:1. Fundamental AnalysisTruly superior companies exist, are sometimes undervalued by markets, and can be identified by mostly financial research. Forex market offers opportunity and information The forex market is what is called an international exchange currency market, where currencies are exchanged on a daily basis. There are five forex market centers around the world - New York, London, Tokyo, Frankfurt and Zurich. Global Markets: A Window on the World Economy Expectations drive the market. Every stock price is driven by what people expect the company to do. Oil and Gasoline Price Uncertainties The Light Crude Continuous Contract hit an all-time high at $70.85 a barrel, while Unleaded Gasoline Futures spiked 50% or $1 a gallon on Tuesday.
|
| home | site map |
| © BullMarketData.com 2008 |
