The HAF Inventorium

[Bad Penny II]

This is where we discuss our plans to take us from where birth misplaced us to where we belong, amongst the filthy, too attractively spoused, too large housed, rich.

[Ecurb Noselrub]

My plan is to continue working.

[xSilverPhinx]

Well, if I save about 10% of my earnings every month by the time I'm 50...no, I still won't be rich.

[Dave]

Though my income is in excess of my expenditure I cannot raise enough cash to match the price of a bungalow (rather than my upstairs bed sitter type place) and house prices rise faster than my monthly savings. I have more money than I can do anything sensible with but not enough to do the sensible thing!

So, for the moment I am cash rich in some ways but just not rich enough.

[Icarus]

Silver, if you save 10% of your net income until you are 50, you may not be rich but you will have a helluva lot more savings than most humans.  I urge you to do just that.  You have 18 years to get a a lot richer than you would be without shrewd manipulation of you funds.

The allegory goes like this:  Someone asked Baron Rothschild if he knew the seven wonders of the world.  He said; "no but I know what the eighth wonder is".  The questioner asked what that would be. He replied; Compound interest.

Compound interest is a miraculous scheme that you are entirely free to put to work for you. Lets start with the easy one which is simple interest.  suppose you had a spare thousand dollars that you could do without for 18 years   calculate the future value by this really easy formula.... P(1+i0^18   P is the principal amount, i is the rate of interest.  Lets dream up an interest rate of say 4 percent.  so the equation looks like this.....1000(1 + .04) ^18....or 1,04 raised to the 18th power  multiplied by the initial investment of one thousand drachma, dollars, or whatever,  that comes out to be 2,025 drachma and you have not done a damned thing to earn that money except wait for it to grow.   But that is only simple interest.  Compound interest has far far more magic.   The compound equation is a bit more elaborate but the result is almost orgasmic if you are inclined toward the Midas touch..  Go to wiki or google and look for a compounding facility. Whoopeee !!!! Plug in the maximum amount that you could realistically save on a monthly basis and see where you are at age 50. It will be hugely more than the measly 2000 that the simple interest yielded.

I sound like an endowment insurance policy agent but that is not so.  I am merely an old man who likes to mess with math and the way it can either enrich or make you poor. Too damned bad that I did not get on this math kick early enough in life to have let me be wealthy.  One of the cute examples floating around on the internet is that if you forego a Starbucks four dollar latte three times every week then you will have saved 17 thousand dollars in 20 years. 

[xSilverPhinx]

Silver, if you save 10% of your net income until you are 50, you may not be rich but you will have a helluva lot more savings than most humans.  I urge you to do just that.  You have 18 years to get a a lot richer than you would be without shrewd manipulation of you funds.

The allegory goes like this:  Someone asked Baron Rothschild if he knew the seven wonders of the world.  He said; "no but I know what the eighth wonder is".  The questioner asked what that would be. He replied; Compound interest.

Compound interest is a miraculous scheme that you are entirely free to put to work for you. Lets start with the easy one which is simple interest.  suppose you had a spare thousand dollars that you could do without for 18 years   calculate the future value by this really easy formula.... P(1+i0^18   P is the principal amount, i is the rate of interest.  Lets dream up an interest rate of say 4 percent.  so the equation looks like this.....1000(1 + .04) ^18....or 1,04 raised to the 18th power  multiplied by the initial investment of one thousand drachma, dollars, or whatever,  that comes out to be 2,025 drachma and you have not done a damned thing to earn that money except wait for it to grow.   But that is only simple interest.  Compound interest has far far more magic.   The compound equation is a bit more elaborate but the result is almost orgasmic if you are inclined toward the Midas touch..  Go to wiki or google and look for a compounding facility. Whoopeee !!!! Plug in the maximum amount that you could realistically save on a monthly basis and see where you are at age 50. It will be hugely more than the measly 2000 that the simple interest yielded.

I sound like an endowment insurance policy agent but that is not so.  I am merely an old man who likes to mess with math and the way it can either enrich or make you poor. Too damned bad that I did not get on this math kick early enough in life to have let me be wealthy.  One of the cute examples floating around on the internet is that if you forego a Starbucks four dollar latte three times every week then you will have saved 17 thousand dollars in 20 years.

I have started saving, it's not enough to reach 10% but it is something. I will probably spend it on travel though. I really don't see the point in hording money you're not willing to spend when you're relatively young and still in good health. I especially want to fund my mother's travels as well...she's 56 and works too hard. 

Travel is just one of those things. Maybe by the time I'm 50 it's going to become impossible.