Stock market forces where should i invest my money 33

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Unformatted text preview: ces Cars, gas, electronics, contracts Consumer spending Discount stores and clubs, online purchase Interest rates and the Fed Refinancing my mortgage Housing starts Is now the time to buy a house? Stock market forces Where should I invest my money? 33 Smart Investors Understand Interest Simple Interest Principal x Rate x Times equals interest rincipal ate $100 x 6% x 1 (1 year) $100 x .06 x 1 = $6.00 interest Simple interest = (P x R x T) Simple We’ll cover other ways to calculate interest and how inflation impacts interest rates and investments 34 And the Rule of 72 Divide 72 by the annual rate of return on Divide your investments to approximate the number of years it takes to double your money money At 5%, it takes 72/5 = 14.4 years At 10% it takes 72/10 = 7.2 years At 15% it takes 72/15 = 4.8 years 35 Financial Planning and Its Benefits Personal financial planning is the process of Personal managing your money to achieve personal economic satisfaction. Advantages: economic Allows you to see where you are and where Allows you are going you Take corrective actions when needed Corporations have business plans, shouldn’t you? 36 Six­step Procedure for Financial Planning Six­step Procedure for Financial Planning Continued… Developing Personal Financial Developing Personal Financial Goals GOAL­SETTING GUIDELINES Goals should be: Specific: know what your goals are to create a plan Measurable: with a specific amount Action­oriented: identify the personal financial activities Realistic: utilizing your income and life situation Time­based: identify the time frame to achieve the goal Implementing Your Financial Plan First develop good financial habits Use a well conceived spending plan to help...
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