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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
$100 x 6% x 1 (1 year)
$100 x .06 x 1 = $6.00 interest
Simple interest = (P x R x T)
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
your investments to approximate the
number of years it takes to double your
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
managing your money to achieve personal
economic satisfaction. Advantages:
economic Allows you to see where you are and where
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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- Spring '14