Even better, show her how to use a 9.9 APR credit card to invest in a cash flow that will net her 5-15%. . .
good point chmod, I was thinking the same as I was reading the post, alot of people think its the theorem of 72 and not the approximation of 72. Disclaimer: The following should only be read by math nerds... The rule of 72 can be really useful in quickly figuring out approximate interest rates for stocks or large roots(as long as the answer is less than say 30) without a calculator. For example if I know a stock went from say 3 to 10 in 12 years(This example is the same as taking the 12th root of 3 and 1/3). 10/3 = 3 1/3, 3 1/3 is about equal to 2^1.8. So the stock doubled 1.8 times in 12 years. Therefore it doubled every 12/1.8=6.7 years. Reversing the rule of 72, 72/6.7 is around 10.8%. According to my calculator the answer is 10.55% not too bad for an approximation. This may sound a little difficult, but its really not much work especially compared to the correct method of taking the twelth root of 3 1/3.
buy discounted cashflows, prefably those backed by real assets. It's what insurance companies do, but on much larger scale.
Good idea Humble, But I doubt she will get a CL that she can start discounting notes with.... LOL. But while I have got you here, where on the net can I buy a realistic Tri-merged mortgage score? Lestx.
remember that a 9.9 % credit card really charges you about 11%(because of how they compound it) and that inflation has averaged 3% over the long term AND that you have to pay out taxes as well. Its starts getting much less enticing with those factored in. The biggest thing I recommend is Roth IRAs especially for your kids. There is kind of a loophole that I've heard. The money put in is supposed to be "earned income" however if you make under I think the figure is $8k you don't have to report it to the IRS. I've heard that brokers often put the money into their children's accounts. Now for all of you struggling to pay into your retirement accounts and investing...If you put $3000 into your childs roth IRA account when they are 10, and assuming you put it into the S&P 500 earning about 12%(long term ave) and an inflation rate of 3% is a real return of 9%. It comes out to $343k in todays dollars. Put $3000 in three years in a row and s/he is a millionaire when they retire. A little foresite can go a long way.
TRILLIONS of dollars over the next 15 years were moved from the "old" kind of life insurance to the "new" kind. 1*I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. 2*Every creditor in business is hell bent on charging you the HIGHEST possible interest rate they can in order to "acquire" your hard earned money. Your job is to demand the lowest possible rate you can get. Make no mistake, WWIII is well under way, and the battle is over money, YOUR money. Butch ----------------======= 1*What war are you talking about? 2* Right you are Butch. And Fico is Part of their fleet of dump trucks to haul it away.
Folks the rule of 72 and the astonishing ramifications of high interest rates explains; 1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base). B U T C H ===================== Butch This is what I have been saying about credit scoring all along,but some folks just don't want to face the facts. I have been warning about this for some time. What you have reveiled is very inportant to peoples financial health and I really hope folks take heed to what you"ve said and not take it litely and get offended like Pat,Dock,Breese & John M did with me for telling about it.
1*Butch just gave you a hint of things which is much much less than the tip of an ice berg. 2*Not meaning to take anything away from Butch Heven forbid - I have been sharing this kind of info. since I have beeen a member of this board. I applaud Butch for his posting on the subject and thank him for his effort.
Great Post Butch!!!! Once again, your post are a source of CORRECT information that is useful to all here on CN. Thanks again for sharing this ... "Pretty soon, you will have your own radio, TV or newspaper weekly article because you are just that damn good!!!" LOL :O)
Good stuff Funny how I used to know all this stuff back in 11th and 12th grade calculus and now I do not remember anything. I just use my calculator. And whoever made the post about minimum payment, you rock
Another excellent article you have written. This is great information to know. 1*This is the stuff kids should be taught in grade school 2*I am sure this info you shared with us will make it into some writers articale someday, islandboy ======================= 1*Let me restate what I have posted more than once on the board. Schools teach how to earn money -they do not not teach you what to do with it after you get it.It's not what you aquire it's what you keep that counts! 2*Much has already been written about this.You just have to know where to look or have worked in the fields I list in my Background Expereiences.
Granted but it's was nothing new to me. Let me give you a couple of other points he never mentioned. 1*A lot of accountants don't know these facts. 2*Many insurance agents don't know what goes on in their own industry. I'm sure Butch will agree with me that time and space does not allow him or me to post every thing about the subject on a board such as this.
The rule of 78 is used to determine the the balance due on an early pay off of an add on interest type loan. which is different than a simple interest loan. The rule of 72 is about compound interest paid on investments like stocks bonds CDs MutualFunds & Bank savings accounts . I have a question for anyone. If you borrow $20000 with a 20 year mortgage type loan at 10% and invest the $20000 in a side fund paying a steady 10% will you make money lose money or break even over the life of the loan?
1*People this knowledge is priceless, use it and pass it on. 2*I have the same information and haved used it to my advantage Memo --------------------------------------------- ````````````````````````````````````` 1*Evidently Breeze,P.Doc,John M and Pat don't think so as they chose to ignore it! 2*Thanks to this knowledge I am in a position where my scores don't matter. I have no Idea what my scores are and could care less.Who nees the scores when you have the money.
Now folks you see why your friendly banker will give you a toster for opening up an account. They ought to give you a whole truck load of them. Pretty expensive tosters aren't they?
