When you think about saving money, there are SAFE ways to save and RISKY ways to save. Do you know the difference?
Most people believe that saving money in CD’s and in bank accounts is a safe way to save. I would like to examine that concept.
You invest $10,000 at a one percent
rate of return with your local bank …
You would have actually lost purchasing power!
This is a hypothetical situation. If your tax bracket is not 28%, results will vary
So by saving your money in a CD, you are actually losing money. Now let’s take a look at what most people deem as risky investment. The media has painted a picture of the stock market that is gloom and doom. Anytime the market drops, it is front page news and the leading story for the network news centers.
When is the last time those media outlets covered the gains to the market? According to “Yahoo Finance”, the S&P 500 has had an average returned of 12.70% over the past 30 years ending December 31st, 2014. So when you are looking for long term investments, the market is the place to be.
To figure how to accumulate wealth, you must know the Rule of 72. The Rule of 72 is a banking rule that tells you how quickly your money will double. The concept states that you take the interest rate you are getting on your money and divide it into 72. If you were lucky enough to get 3% with your bank, you divide 3 into 72 and it would take 24 years for that money to double. So if you had $1 invested at 3%, in 24 years you would have $2. If you invested in the market and received 12%, that same money would only take 6 years to double (72 divided by 12% = 6 years).
The Rule of 72
Approximates the number of years it takes your
money to double
You don’t have to have $10,000 to invest in the market, you could do so for as little as $50/month. The truth is that $50 a month invested in a fund returning 12% over 48 years would accumulate to $1,552,359. Can you afford to leave your money in the bank?
If America learned and implemented this simple concept, we could guarantee financial freedom. Call me at (610)657-1708 for more information about this subject or other financial needs. All consultations and plans are complimentary. You can also email me at firstname.lastname@example.org.