Comments on: Compound Interest Week: An Introduction http://www.lazymanandmoney.com/compound-interest-week-an-introduction/ Saving, Earning, and Investing Money Sat, 21 Nov 2009 00:22:17 -0800 http://wordpress.org/?v=2.8.5 hourly 1 By: 15 Products that save Time, Money, and Space http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-72289 15 Products that save Time, Money, and Space Wed, 05 Mar 2008 01:36:47 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-72289 [...] While I appreciate DVD box sets as much as anyone else, I thought I’d consider something productive for the ones I love this year. There are lot of ways to classify productivity or efficiency, and many would include items that save time or money on that list. I’m adding items that save space as well. It’s often overlooked, but the more space your possessions take up, the bigger home you’ll need. This leads to a direct expense of having to buy a more expensive home, paying more property tax, and having to heat/cool all that extra space. Since a home is typically everyone most expensive purchase and savings here can translate to thousands of dollars compounded over time. [...] [...] While I appreciate DVD box sets as much as anyone else, I thought I’d consider something productive for the ones I love this year. There are lot of ways to classify productivity or efficiency, and many would include items that save time or money on that list. I’m adding items that save space as well. It’s often overlooked, but the more space your possessions take up, the bigger home you’ll need. This leads to a direct expense of having to buy a more expensive home, paying more property tax, and having to heat/cool all that extra space. Since a home is typically everyone most expensive purchase and savings here can translate to thousands of dollars compounded over time. [...]

]]> By: Investing Blog http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10434 Investing Blog Sun, 13 May 2007 23:59:19 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10434 An alternative to starting a credit card company is supplying loans to borrowers at prosper. With a diversified portfolio, you can earn 15 to 17% easily. I only have about $100 invested, but I plan to increase that amount in the next couple of months. Besides, spending the time finding trustworthy borrowers is invaluable. Then once you <a href="http://www.investortrip.com/how-to-calculate-compound-interest/" rel="nofollow">calculate compound interest</a> gains over say the 3 year loan period, you will be amazed at all the money Visa and American Express earns. It's truly powerful! An alternative to starting a credit card company is supplying loans to borrowers at prosper. With a diversified portfolio, you can earn 15 to 17% easily. I only have about $100 invested, but I plan to increase that amount in the next couple of months. Besides, spending the time finding trustworthy borrowers is invaluable. Then once you calculate compound interest gains over say the 3 year loan period, you will be amazed at all the money Visa and American Express earns. It’s truly powerful!

]]> By: Quixote http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10422 Quixote Fri, 11 May 2007 18:21:53 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10422 The math isn't hard, but in general, if the rate is low: seventy divided by the rate (for a number of periods) will give you the doubling time (in terms of those periods) to a very close approximation. In an inflation ridden country - 70 divided by inflation rate will give you, close enough, the number of periods in which you will have to be earning twice what you are earning now: If inflation is double digit, at say 15% per year - you'd have to earn double in 70/15 = 4.7 years. A day trader that can work an average gain of 3% per day - with no failures (pretty sharp!) would double his capital in 70/3 = 23 working days, or a little more than a month... The method is used in nuclear physics, to estimate the "half life" of a radioactive isotope: a gramme of Carbon 14 would be 1/2 gramme in 5570 years (which makes it useful for dating 'historical' times); a gramme of Plutonium 239 would be down to half that in some 20 000 years, which is why we don't want the stuff around (of course, its quicker decay, as in a fission blast we don't want at all) The math isn’t hard, but in general, if the rate is low: seventy divided by the rate (for a number of periods) will give you the doubling time (in terms of those periods) to a very close approximation. In an inflation ridden country – 70 divided by inflation rate will give you, close enough, the number of periods in which you will have to be earning twice what you are earning now: If inflation is double digit, at say 15% per year – you’d have to earn double in 70/15 = 4.7 years. A day trader that can work an average gain of 3% per day – with no failures (pretty sharp!) would double his capital in 70/3 = 23 working days, or a little more than a month…
The method is used in nuclear physics, to estimate the “half life” of a radioactive isotope: a gramme of Carbon 14 would be 1/2 gramme in 5570 years (which makes it useful for dating ‘historical’ times); a gramme of Plutonium 239 would be down to half that in some 20 000 years, which is why we don’t want the stuff around (of course, its quicker decay, as in a fission blast we don’t want at all)

]]> By: Ben http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10408 Ben Tue, 08 May 2007 22:59:35 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10408 The sad part is that taxes are a killer, they can pull the rug right out from under the power of compounding. The sad part is that taxes are a killer, they can pull the rug right out from under the power of compounding.

]]> By: Lazy Man http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10407 Lazy Man Tue, 08 May 2007 14:05:03 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10407 Customer's Revenge, I usually do it that way, but I liked the simplicity of time to double your money for this example. Telling people that they can double their money in 70 years, I think is a sobering thought vs. 7 years. Of course we also aren't counting some things like inflation and taxes at this stage... That's later this week. Customer’s Revenge, I usually do it that way, but I liked the simplicity of time to double your money for this example. Telling people that they can double their money in 70 years, I think is a sobering thought vs. 7 years.

Of course we also aren’t counting some things like inflation and taxes at this stage… That’s later this week.

]]> By: Customers Revenge http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10406 Customers Revenge Tue, 08 May 2007 13:34:10 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10406 Instead of saying "it will take half as much time to double your money", why not say that you will have a huge amount more in the same time. Take the below chart: notice that doubling the rate over, say 15 years, produces 3 times the return (you have $4.2 for every dollar instead of $2.1). After 25 years your returns are almost 5 times. Years 5% 10% 1 1.05 1.10 5 1.28 1.61 10 1.63 2.59 15 2.08 4.18 20 2.65 6.73 25 3.39 10.83 30 4.32 17.45 In compound interest the sensitivity is with time and interest rate. The initial investment almost doesn't matter, just invest something, anything, to get the benefits. Instead of saying “it will take half as much time to double your money”, why not say that you will have a huge amount more in the same time. Take the below chart: notice that doubling the rate over, say 15 years, produces 3 times the return (you have $4.2 for every dollar instead of $2.1). After 25 years your returns are almost 5 times.

Years 5% 10%
1 1.05 1.10
5 1.28 1.61
10 1.63 2.59
15 2.08 4.18
20 2.65 6.73
25 3.39 10.83
30 4.32 17.45

In compound interest the sensitivity is with time and interest rate. The initial investment almost doesn’t matter, just invest something, anything, to get the benefits.

]]> By: broknowrchlatr http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10403 broknowrchlatr Mon, 07 May 2007 18:25:10 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10403 Its not so easy to have a CC company. you have to deal with defaults. You have to deal with giving people free loans for 30 days. You also have to have rewards to get many people to get the card. No way does that come out to 17% Its not so easy to have a CC company. you have to deal with defaults. You have to deal with giving people free loans for 30 days. You also have to have rewards to get many people to get the card.

No way does that come out to 17%

]]> By: Joseph Sangl http://www.lazymanandmoney.com/compound-interest-week-an-introduction/comment-page-1/#comment-10401 Joseph Sangl Mon, 07 May 2007 15:13:50 +0000 http://www.lazymanandmoney.com/compound-interest-week-an-introduction/#comment-10401 One GUARANTEED way to make 17% per year is to start up a credit card company! One GUARANTEED way to make 17% per year is to start up a credit card company!

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