Thursday, April 21, 2016

everyday finance


I am currently taking a class called Finance for Everyone: Smart Tools for Decision-Making.

Our prof is continually quoting Albert Einstein as saying "The most powerful force in the universe is compound interest."

We are looking at various problems, noting how much difference there is between the amount we put in, and the amount we get out, at different interest rates, and for different periods of time.

The problem we just looked at was saving for retirement.

If we save 1000 a year, and get an 8% increase (as is about what the American stock market has done, on average, over the last 50 years), if we do that for 25 years, we'll end up with $73,105.94.

If we do it for 50 years, we'll end up with $573,770.16.

I knew it would be bigger, but that much bigger?  Wow.

When they say "start saving early," they are not kidding.  !!!


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