Trick or treat my friends. A little wet outside today, but it does look like Halloween will not be rained out. That’s good news for a lot of you out there who have kids. Enjoy the festivities.
This morning I was reading about the 9 new bank closures this week, bringing the total for the year to 115, and I chuckled to myself when I realized how many people still use savings accounts at banks. Seeing how poorly banks are run I asked myself, why would anyone invest their money in a savings account at a bank? Why would anyone want to earn a 1/4% to 1% in a savings account? It’s absolutely crazy. At least put your money in a CD and get your 4%, which is still rather low. Even if you are a conservative investor, you could earn around 7% investing in bonds. It’s amazing to me how many people don’t really understand how money works.
Have you ever heard of the rule of 72? The ‘The Rule of 72′ is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself. For example if you invest $100 at a 4% interest rate the money will double to $200 in 18 years. If you are getting 6% on your money it will take 12 years to double to $200. Invest your money and earn 12% a year and your $100 will double to $200 in just 6 years. Most people don’t know how to even get a 4% return on investments let alone 12%.
Learn how money works. Learn about IRAs, mutual funds and bonds. How many more doubling periods do you have in your life? If you have any questions you can email me at therojek@gmail.com. The Rojek wants to help you my friends. Don’t live in a someday world any longer; set yourself up with a financial plan that works. Happy Halloween.
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