Read an article on the Time value of Money? - Tilted Forum Project Discussion Community

Randerolf · 01-24-2004, 03:00 PM

Hello,

I need to do a report on an article that has to do with an aspect of the time value of money like anuities, compounding, intrest, discounting... that kind of stuff.

I thought I would find an article on how a private savings account would yeild more than social security, but my internet connection has been acting up and haven't found one yet.

Tell me the site or Magazine (and date if magazine) if you have any suggestions. Thanks

kulrblind · 01-27-2004, 05:01 AM

Here's a basic article on the time value of money:
http://www.econedlink.org/lessons/index.cfm?lesson=EM37

You can modify the tenets of the economics of the time value of money if you consider situations like: multiple payments, front-end loading, interest rates, risk, etc.

Not sure if this is what you're looking for, but good luck.

yournamehere · 01-27-2004, 11:30 AM

If you want to do a specific, basic report, as opposed to a broad study, do a Google search on "The Rule of 72."

I sure wish I had taken 10 minutes to read up on it 30 years ago.

Cynthetiq · 01-27-2004, 11:36 AM

Quote:

Originally posted by yournamehere
If you want to do a specific, basic report, as opposed to a broad study, do a Google search on "The Rule of 72."

I sure wish I had taken 10 minutes to read up on it 30 years ago.

I read it almost 30 years ago and didn't apply it... so there.

yournamehere · 01-27-2004, 12:09 PM

Quote:

Originally posted by Cynthetiq
I read it almost 30 years ago and didn't apply it... so there.

I hear ya - it's been 10 for me now - to no avail.
It's that pesky "savings" concept that I have yet to master.
It's amazing how - even though my income has tripled in the last 10 years - my spending is keeping it a very close race.

Cynthetiq · 01-27-2004, 01:04 PM

Quote:

Originally posted by yournamehere
I hear ya - it's been 10 for me now - to no avail.
It's that pesky "savings" concept that I have yet to master.
It's amazing how - even though my income has tripled in the last 10 years - my spending is keeping it a very close race.

oh my spending hasn't kept up with my income. I've found a comfortable level and it's holding at that point. I don't see upscaling worthwhile.

savings...

70-20-10 rule.

70% to living expenses including groceries
20% discretionary spending for events like going out to dinner
10% savings guaranteed

and if you can't do the percentages do the simple math. $5 a week, at the end of the year it's more than just $5.

Randerolf · 01-27-2004, 08:47 PM

I decided on this one. i report is tomorow. It's a great thing to utalize.

http://www.ivillage.com/money/life_s..._33145,00.html

Quote:

The Power of Compound Interest
by Stacy Kravetz

Compounding is what happens when your interest earns interest, resulting in a snowball effect.

For example, if you start out with $100 and you compound annually at 10 percent, you'll have $110 by the end of the year. The second year you add $100 to the account and still earn 10 percent, but you earn it on $210, giving you $231 at the end of the year -- doubling the interest you earned in the first year. It doesn't seem like much at first, but over the long haul all that interest adds up.

Interest can be compounded annually, monthly or even daily, meaning you earn interest on whatever amount you have at the end of that period. Daily compounding gives you more money than annual compounding because your principal -- the amount that earns you interest -- increases every day rather than only once a year. The more frequently your interest is compounded, the more it will grow.

Compounding has more power the earlier you start investing. The following example will show you how.

The Power of Compounding

Say you invest $2,000 a year for 10 years from the time you're 22 until you're 32. Then you stop investing and let the money compound at 10 percent for 28 years until you're 59 1/2, which, depending on the type of account, may be the first time you can remove it without penalty. You'll have $505,629 after contributing a total of $20,000 and letting it compound.

On the other hand, if you wait until you're 32 to begin investing and you put away $2,000 a year for 28 years until you're 59 1/2, you'll only have $295,262, even though you'll have contributed a total of $56,000. Since money compounds more the longer you leave it in your account, it makes sense to start as early as you can.

A great strategy for growing your savings is to commit to investing a certain amount per month. If you can invest $100 a month, for example, and commit to increasing your monthly investment by the rate of inflation each year (so if the inflation rate is 4 percent invest $100 a month the first year, $104 a month the second year, $108 the third year), your savings will add up quickly.

Think of the $100 payment -- or whatever amount you can afford -- as a monthly expense like your phone or electric bill. Put the payment into a money market account each month when you're paying your bills. If you invest $100 a month for five years and increase the monthly contribution by 10 percent a year, you'll have $9,278 assuming a 10 percent rate of return.

Five Steps to Making Your Money Grow

Start investing as early as you can

Get the highest interest rate, or rate of return, you can find

Don't take the money out of retirement accounts because you'll be charged a penalty

Try to make the maximum allowable contribution every year, even if it's not tax-deductible

Leave your money in the account as long as you can after you've hit age 59 1/2; your money will compound more the longer you let it sit

01-24-2004, 03:00 PM	#1 (permalink)
Randerolf Fireball Location: ~	Read an article on the Time value of Money? Hello, I need to do a report on an article that has to do with an aspect of the time value of money like anuities, compounding, intrest, discounting... that kind of stuff. I thought I would find an article on how a private savings account would yeild more than social security, but my internet connection has been acting up and haven't found one yet. Tell me the site or Magazine (and date if magazine) if you have any suggestions. Thanks

01-27-2004, 11:30 AM	#3 (permalink)
yournamehere Invisible Location: tentative, at best	If you want to do a specific, basic report, as opposed to a broad study, do a Google search on "The Rule of 72." I sure wish I had taken 10 minutes to read up on it 30 years ago. __________________ If you want to avoid 95% of internet spelling errors: "If your ridiculous pants are too loose, you're definitely going to lose them. Tell your two loser friends over there that they're going to lose theirs, too." It won't hurt your fashion sense, either.

01-27-2004, 05:01 AM	#2 (permalink)
kulrblind plays well with others Location: Canada	Here's a basic article on the time value of money: http://www.econedlink.org/lessons/index.cfm?lesson=EM37 You can modify the tenets of the economics of the time value of money if you consider situations like: multiple payments, front-end loading, interest rates, risk, etc. Not sure if this is what you're looking for, but good luck.