All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the author and publisher. No patent liability is assumed with respect to the use of the information herein. Although every precaution has been taken in the preparation of this book, the author and publisher assume no responsibility for errors or omissions. Neither is any liability assumed for damages resulting from the use of the information contained herein.
Printed in the United States of AmericaRICHARD P. BLOOM is a well-known financial educator who has specialized in financial and retirement planning and employee benefits for over 30 years. Mr. Bloom is a Life Member of the Million Dollar Round Table and has received numerous sales and service achievement awards.
In addition to a BA and M.Ed., he holds the Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Registered Employee Benefits Consultant designations from the American College. He is a contributor to the Jump$tart Coalition for Personal Financial Literacy and New Age Investor and the author of the financial education books, IT’S IN YOUR INTERE$T and INTERE$T WI$E.
A resident of Palm Beach Gardens, FL he may be contacted at rb4finplan@aol.com.
the value of a single deposit over time
the value of annual and monthly deposits over time rule of 72 & 115 - when money doubles & triples
the worth today of a future sum.
how much you need to save to reach a goal fixed vs. variable interest rate comparison
tax brackets
after-tax equivalent yields
taxable equivalent yields
double tax-free yields
taxable rule of 72 - taxable rule of 115
time value of money
annual vs. monthly investing beginning vs. end of year investing the earlier the better
how much you must earn to break even
what your money is worth at various inflation rates what your money needs to be worth in the future
During your lifetime, you will be confronted with having to make various financial decisions. Whether you invest or save, you need to become money wise, especially how interest affects your financial well being.
MONEY WI$E has been written to provide you with easy to understand information on how to earn and keep more of your interest on your money and minimize taxes.
When presented with financial alternatives and strategies concerning interest, you will be able to make the right choice, rewarding yourself with hundreds and thousands of dollars in additional interest each and every year.
It is my hope that this book will help make financial plans and interest work for, not against you, by becoming a better informed investor, saver, taxpayer and financially wiser manager of your money.
The role that interest plays in our everyday lives is fundamental to our financial well being.
Today, more than ever, consumers need to become money wise, especially information that will be financially beneficial to them in order to earn and keep more on what they save and invest, and pay less in taxes. Banks, insurance companies and brokerage firms are all competing for your business. Each has a deal, making it difficult for you to determine which is best for you.
MONEY WI$E is a guide for consumers who wish to understand and profit by how interest and taxes affect them. Making sense of the various alternatives with which you are confronted, you will come out the winner. My 30 years in the life insurance and financial service industry has made it very clear to me, that, when it comes to personal financial decisions such as choosing a savings account, after tax, tax deferre d, tax-free or tax deductible investments, many consumers do not know how to maximize their financial gain and minimize taxes, costing themselves hundreds and thousands of dollars every year.
The interest rate you earn, the compounding method, the period o f time involved, your tax bracket, rate of inflation, how early you start, the type of investment you choose, and your awareness of basic financial concepts, facts, and strategies will determine eventually how much you profit and how much you pay.
This book contains many easy to understand tables, examples and explanations on how to locate, use, and apply the data for specific situations to help you make the right choice.
You will be able to apply MONEY WI$E, immediately and throughout your life, rewarding yourself with thousands, tens of thousands, and even hundreds of thousands of more dollars earned on your money, and saved on taxes.
INTEREST is money paid for the use of money, expressed as a percent (%) or rate over a period of time. It is the amount of money paid each year at a declared rate on borrowed or invested capital.
Interest is paid to you for the use of your money or paid by you for using someone else's money.
Interest can be simple or compound.
Simple interest is interest earned only on the principal.
Compound interest is interest earned on the principal and added to the original principal as it is earned. You are therefore earning interest on interest as well as principal. The greater the period of time, the larger the difference becomes in favor of compound over simple interest. The more frequent the compounding period the higher your return. This larger amount is known as the annual percentage yield (a.p.y.), defined as the actual interest rate your money earns at the stated compou nd interest rate for a full year on a deposit such as a money market or certificate of deposit.
For example, one dollar deposited at 3%, compounding annually from the time Columbus discovered America would have accumulated to over one million dollars.
.A sum of $8,000 compounding annually at 5% for the past 100 years would likewise have accumulated today to more than one million dollars.THE SECRET TO BUILDING WEALTH AND GROWING RICH IS TO LET YOUR MONEY COMPOUND, COMPOUND, AND COMPOUND, YEAR AFTER YEAR AFTER YEAR.
THE VALUE OF A SINGLE DEPOSIT OVER TIMEHow can you easily determine what a lump sum will grow to at various interest rates and time periods?
The following table based upon the growth of a single deposit of $1.00 provides annual compounding "factors" or multipliers" which will enable you to obtain an answer for any amount of money.
COMPOUND INTEREST TABLE
HOW A SINGLE DEPOSIT OF $1.00 WILL GROW AT VARIOUS INTEREST RATES COMPOUNDED ANNUALLY
END OF INTEREST RATE
YEAR 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5% 7% 1 1.030 1.035 1.040 1.045 1.050 1.055 1.060 1.065 1.070 2 1.061 1.071 1.082 1.092 1.103 1.113 1.124 1.134 1.145 3 1.093 1.109 1.125 1.141 1.158 1.174 1.191 1.208 1.225 4 1.126 1.148 1.170 1.193 1.216 1.239 1.262 1.286 1.311 5 1.159 1.188 1.217 1.246 1.276 1.307 1.338 1.370 1.403 6 1.194 1.229 1.265 1.302 1.340 1.379 1.419 1.459 1.501 7 1.230 1.272 1.316 1.361 1.407 1.455 1.504 1.554 1.606 8 1.267 1.317 1.369 1.422 1.477 1.535 1.594 1.655 1.718 9 1.305 1.363 1.423 1.486 1.551 1.619 1.689 1.763 1.838 10 1.344 1.411 1.480 1.553 1.629 1.708 1.791 1.877 1.967 15 1.558 1.675 1.801 1.935 2.079 2.232 2.397 2.572 2.759 20 1.806 1.990 2.191 2.412 2.653 2.918 3.207 3.524 3.870 25 2.094 2.363 2.666 3.005 3.386 3.813 4.292 4.828 5.427 30 2.427 2.807 3.243 3.745 4.322 4.984 5.743 6.614 7.612 35 2.814 3.334 3.946 4.667 5.516 6.514 7.686 9.062 10.677 40 3.262 3.959 4.801 5.816 7.040 8.513 10.286 12.416 14.974
END OF INTEREST RATE
YEAR 7.5% 8% 8.5% 9% 9.5% 10% 12% 15% 1 1.075 1.080 1.085 1.090 1.095 1.100 1.120 1.150 2 1.156 1.166 1.177 1.188 1.199 1.210 1.254 1.323 3 1.242 1.260 1.277 1.295 1.313 1.331 1.405 1.521 4 1.335 1.360 1.386 1.412 1.438 1.464 1.574 1.749 5 1.436 1.469 1.504 1.539 1.574 1.610 1.762 2.011 6 1.543 1.587 1.631 1.677 1.724 1.772 1.974 2.313 7 1.659 1.714 1.770 1.828 1.887 1.949 2.211 2.660 8 1.783 1.851 1.921 1.993 2.067 2.144 2.476 3.059 9 1.917 1.999 2.084 2.172 2.263 2.358 2.773 3.518 10 2.061 2.159 2.261 2.367 2.478 2.594 3.106 4.046 15 2.959 3.172 3.400 3.642 3.901 4.177 5.474 8.137 20 4.248 4.661 5.112 5.604 6.142 6.727 9.646 16.367 25 6.098 6.848 7.687 8.623 9.668 10.835 17.000 32.919 30 8.755 10.063 11.588 13.268 15.220 17.449 29.960 66.212 35 12.569 14.785 17.380 20.414 23.960 28.102 52.800 133.176 40 18.044 21.725 26.133 31.409 37.719 45.259 93.051 267.864
To find how much a single deposit of $25,000 would grow to in 25 years, assuming a 5% compounded annual interest rate, locate the factor, 3.386, where the columns for 5% and 25 years intersect and multiply it by $25,000. Answer: $84,650.
To determine how much a single deposit of $25,000 would grow to at the end of 25 years if the interest rate was 6% for the first 6 years, 8% for the next 9 years, and 7% for the remaining 10 years, you would first locate the factor, 1.419, where the columns for 6% and 6 years intersect and multiply it by $25,000.
You would next multiply the answer, $35,475, by the factor of 1.999, located where the columns for 8% and 9 years intersect. Finally, multiply the answer, $70,915 by the factor, 1.967, located where the columns for 7% and 10 years intersect, to arrive at your answer of $139,490.
YEAR 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 5 11,592 12,166 12,762 13,382 14,025 14,693 15,386 16,105 17,623 20,113
10 13,439 14,802 16,288 17,908 19,671 21,589 23,673 25,937 31,058 40,455
15 15,579 18,009 20,789 23,965 27,590 31,721 36,424 41,772 54,735 81,370
20 18,061 21,911 26,532 32,071 38,696 46,609 56,044 67,274 96,462 163,665
25 20,937 26,658 33,863 42,918 54,274 68,484 86,230 108,347 170,000 329,189
30 24,272 32,433 43,219 57,434 76,122 100,626 132,676 174,494 299,599 662,117
35 28,138 39,460 55,160 76,860 106,765 147,853 204,139 281,024 527,996 1,331,755 40 32,620 48,010 70,399 102,857 149,744 217,245 314,094 492,592 930,509 2,678,635
SUM FACTOR
$12,000 x 1.2 $15,000 x 1.5 $20,000 x 2 $25,000 x 2.5 $50,000 x 5
$100,000 x 10 To determine how sums less than $10,000 would grow, without using the compound interest table, divide the figures in the table as follows:SUM FACTOR
$1,000 -:10 $2,000 -:5 $4,000 -:2.5 $5,000 -:2 $8,000 -:1.2
To determine what a deposit made every year would accumulate to, the table below provides the factors by interest rate and time period.ANNUAL COMPOUND INTEREST TABLE HOW $1.00 DEPOSITED AT THE BEGINNING OF EACH YEAR WILL GROW AT VARIOUS INTEREST RATES COMPOUNDED ANNUALLY
END OF INTEREST RATE
YEAR 3% 3.5% 4% 4.5% 5% 5.5% 6% 6.5% 7% 1 1.030 1.035 1.040 1.045 1.050 1.055 1.060 1.065 1.070 2 2.091 2.106 2.122 2.137 2.153 2.168 2.184 2.199 2.215 3 3.184 3.215 3.247 3.278 3.310 3.342 3.375 3.407 3.440 4 4.309 4.363 4.416 4.471 4.526 4.581 4.637 4.694 4.751 5 5.468 5.550 5.633 5.717 5.802 5.888 5.975 6.064 6.153 6 6.663 6.779 6.898 7.019 7.142 7.267 7.394 7.523 7.654 7 7.892 8.052 8.214 8.380 8.549 8.722 8.898 9.077 9.260 8 9.159 9.369 9.583 9.802 10.027 10.256 10.491 10.732 10.978 9 10.464 10.731 11.006 11.288 11.578 11.875 12.181 12.494 12.816 10 11.808 12.142 12.486 12.841 13.207 13.584 13.972 14.372 14.784 15 19.157 19.971 20.825 21.719 22.658 23.641 24.673 25.754 26.881 20 27.676 29.270 30.969 32.783 34.719 36.786 38.993 41.349 43.865 25 37.553 40.313 43.312 46.571 50.114 53.966 58.156 62.715 67.677 30 49.003 53.430 58.328 63.752 69.761 76.419 83.802 91.989 101.073 35 62.276 69.008 76.598 85.164 94.836 105.765 118.121 132.097 147.914 40 77.663 87.510 98.827 111.847 126.840 144.119 164.048 187.048 213.610
END OF INTEREST RATE
YEAR 7.5% 8% 8.5% 9% 9.5% 10% 12% 15% 1 1.075 1.080 1.085 1.090 1.095 1.100 1.120 1.150 2 2.231 2.246 2.262 2.278 2.294 2.310 2.374 2.473 3 3.473 3.506 3.540 3.573 3.607 3.641 3.779 3.993 4 4.808 4.867 4.925 4.985 5.045 5.105 5.353 5.742 5 6.244 6.336 6.429 6.523 6.619 6.716 7.115 7.754 6 7.787 7.923 8.061 8.200 8.343 8.487 9.089 10.067 7 9.446 9.637 9.831 10.029 10.230 10.436 11.300 12.727 8 11.230 11.488 11.751 12.021 12.297 12.580 13.776 15.786 9 13.147 13.487 13.835 14.193 14.560 14.937 16.549 19.304 10 15.208 15.646 16.096 16.560 17.039 17.531 19.655 23.349 15 28.077 29.324 30.632 32.003 33.442 34.950 41.753 54.718 20 46.553 49.423 52.489 55.765 59.264 63.003 80.699 117.810 25 73.076 78.954 85.355 92.324 99.914 108.182 149.334 244.712 30 111.154 122.346 134.773 148.575 163.908 180.943 270.293 499.957 35 165.821 186.102 209.081 235.125 264.649 298.127 483.463 1013.346 40 244.301 279.781 320.816 368.292 423.239 486.852 859.142 2045.954
To find how much an annual deposit of $2,000 will grow at an assumed 5% interest rate compounded annually for 20 years, locate the factor, 34.719 where the columns for 5% and 20 years intersect. Multiply the factor by $2,000 to arrive at your answer, $69,438.
WHAT A DIFFERENCE A RATE MAKES
HOW $2,000 DEPOSITED AT THE BEGINNING OF EACH YEAR WILL GROW AT VARIOUS INTEREST RATES COMPOUNDED ANNUALLY
TOTAL INTEREST RATE
YEAR DEPOSITS 4% 5% 6% 7% 8% 9% 10% 1 $ 2,000 $ 2,080 $ 2,100 $ 2,120 $ 2,140 $ 2,160 $ 2,180 $ 2,200 5 $ 10,000 11,266 11,604 11,951 12,307 12,672 13,047 13,431 10 $ 20,000 24,973 26,414 27,943 29,567 31,291 33,121 34,077 15 $ 30,000 41,649 45,315 49,345 53,776 58,649 64,007 69,899 20 $ 40,000 61,938 69,439 77,985 87,730 98,846 111,529 126,005 25 $ 50,000 86,623 100,227 116,313 135,353 157,909 184,648 216,364 30 $ 60,000 116,657 139,522 167,603 202,146 244,692 297,150 361,887 35 $ 70,000 153,197 189,673 236,242 295,827 372,204 470,249 596,254 40 $ 80,000 197,653 253,680 328,095 427,220 559,562 736,584 973,704
From the above table, you can see how a small difference in interest can, through the power of compounding result in more money for you. The following table illustrates what a deposit made every year would grow to, if compounded monthly.
MONTHLY COMPOUND INTEREST TABLE HOW $1.00 DEPOSITED AT THE BEGINNING OF EACH YEAR WILL GROW AT VARIOUS INTEREST RATES
END OF INTEREST RATE
YEAR 3% 4% 5% 6% 7% 5 $ 5.475 5.645 5.822 6.005 6.195 10 11.834 12.535 13.293 14.105 14.976 15 19.221 20.947 22.882 25.030 27.426 20 27.800 31.216 35.188 39.767 45.074 25 37.766 43.752 50.982 59.644 70.093 30 49.341 59.055 71.249 86.455 105.561 35 62.785 77.736 97.260 122.620 155.840 40 78.402 100.541 130.642 171.401 227.118
8% 9% 10% 12% 15% 5 6.392 6.596 6.808 7.256 7.996 10 15.914 16.923 18.009 20.439 24.481 15 30.101 33.092 36.438 44.387 60.339 20 51.238 58.409 66.760 87.894 135.140 25 82.728 98.045 116.649 166.933 292.760 30 129.644 160.104 198.731 310.523 624.896 35 199.541 257.269 333.781 571.382 1,324.770 40 303.677 409.399 555.980 1,045.283 2,799.537
To find how much an annual deposit of $2,000 each year will grow to at an assumed 5% interest rate, compounded monthly for 25 years, locate the factor, 50.982 where the columns for 5% and 25 years in tersect. Multiplying the factor by $2,000 gives you $101,964.
If your $2,000 annual deposit was compounding annually for 25 years at 5% interest, instead of monthly, you would have only $100,227. The following table will help you calculate what a monthly deposit will accumulate to in the future at various interest rates, compounded annually.
END OF INTEREST RATE
YEAR 3% 4% 5% 6% 7% 1 12.195 12.260 12.325 12.390 12.455 2 24.756 25.010 25.266 25.523 25.782 3 37.123 38.271 38.855 39.445 40.041 4 51.019 52.062 53.122 54.202 55.300 5 64.745 66.404 68.103 69.844 71.626 10 139.802 147.195 155.023 163.310 172.084 15 226.814 245.489 265.956 288.389 312.982 20 327.684 365.079 407.538 455.774 510.599 25 444.621 510.579 588.237 679.771 787.767 30 580.182 687.601 818.859 979.531 1176.509 35 737.335 902.860 1112.980 1380.280 1721.090 40 919.518 1164.860 1488.560 1916.960 2485.520
8% 9% 10% 12% 15% 1 12.520 12.585 12.650 12.780 12.975
2 26.042 26.303 26.565 27.094 27.896
3 40.645 41.255 41.872 43.125 45.056
4 56.417 57.553 58.709 61.080 64.789
5 73.450 75.318 77.230 81.189 87.482
10 181.372 191.203 201.608 224.273 263.441
15 339.945 369.507 401.922 476.435 617.356
20 572.940 643.850 724.529 920.830 1329.206 25 915.286 1065.961 1244.090 1704.007 2760.989 30 1418.306 1715.430 2080.849 3084.232 5640.818 35 2156.350 2713.050 3425.890 5516.660 11433.182 40 3241.800 4249.640 5594.610 9803.428 23083.693
Example: At 5% interest, how much will $135 per month accumulate to by the end of 15 years? To find the answer, locate the factor at the columns where 5% and 15 years intersect. Multiply the factor by the monthly deposit of $135 and you get $35,904, the amount it would have grown to in 15 years.
HOW $100 PER MONTH WILL GROW OVER TIME AT VARIOUS INTEREST RATES COMPOUNDED ANNUALLYEND OF TOTAL INTEREST RATE
YEAR DEPOSITS 4% 5% 6% 7% 8% 9% 10% 1 $ 1,200 $1,225 $1,232 $1,238 $1,245 $1,251 $1,257 $1,265 5 6,000 6,639 6,809 6,982 7,160 7,341 7,527 7,717
10 12,000 14,717 15,499 16,326 17,202 18,128 19,108 20,146
15 18,000 24,545 26,590 28,830 31,286 33,978 36,928 40,162
20 24,000 36,503 40,746 45,564 51,041 57,266 64,345 72,399
25 30,000 51,051 58,812 67,958 78,747 91,484 106,530 124,316
30 36,000 68,751 81,870 97,925 117,606 141,761 171,438 207,929
35 42,000 90,286 111,298 138,028 172,109 215,635 271,305 342,589
40 48,000 116,486 148,856 191,696 248,552 324,180 424,964 559,461
To find how much other monthly deposits will grow to, simply multiply by the appropriate ratio. For example, $200 per month compounded annually, will accumulate to $135,916 over 25 years. This is arrived at by multiplying by 2 the factor found where the 6% and 25 year columns intersect.
RULE OF 72 RULE OF 115 WHEN MONEY DOUBLES WHEN MONEY TRIPLESInstead of searching the compound interest tables for factors to help you determine how long it will take a sum of money to double or triple at an assumed interest rate, there is a much quicker method.
The rule of 72 is a fast, though not a 100% accurate method, to determine how many years it will take money to double based upon an assumed rate of return. Simply divide 72 by the interest rate and you have your answer.
RULE OF 72Conversely, if you know that your money has doubled in a certain period of time, you can determine what your annual compound interest rate was by dividing 72 by the number of years it took your money to double.
72 -:- # OF YEARS = RATE OF RETURN EX. 72 -:- 12 YEARS = 6%The rule of 115, though also not 100% precise, is a shortcut to determine how long it will take a sum of money to triple based upon an assumed rate of return. Simply divide 115 by the interest rate and you have your answer.
RULE OF 115Conversely, if you know how long your money took to triple, you can determine the annual compound interest rate by dividing 115 by the number of years.
115 -:- # OF YEARS = RATE OF RETURN EX. 115 -:- 16 YEARS =7.19%The following table shows the number of years it will take a sum of money to double and triple at various interest rates comp ounded annually using the two shortcut methods.
RULE OF 72 & RULE OF 115 TABLEINTEREST RULE OF RULE OF RATE 72 115 1% 72 YRS. 115 YRS. 2% 36 57.50 3% 24 38.33 3.5% 20.6 32.86 4% 18 28.75 4.5% 16 25.56 5% 14.4 23.00 5.5% 13.1 20.91 6% 12 19.17 6.5% 11.1 17.69 7% 10.3 16.43 7.5% 9.6 15.33 8% 9 14.38 8.5% 8.5 13.53 9% 8 12.78 9.5% 7.6 12.11
10% 7.2 11.50 12% 6 9.58To save a large amount of money may initially seem difficult to achieve. However, through the power of compounding over time, a single deposit or a series of sums of money will make your goal more attainable. How do you determine how much money you need to save over a given time period to reach your goal? By understanding how compound discounting or the present value of money works.
Present value is the value today of a future payment. In other words, finding the present value of a future amount, whether it is a single sum or a series of deposits.
The following tables will help you easily determine how much you need to save either by depositing a lump sum, monthly or annual deposits to reach a predetermined goal.
END OF INTEREST RATE
YEAR 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 .971 .962 .952 .943 .935 .926 .917 .909 .893 .870 2 .943 .925 .907 .890 .873 .857 .842 .826 .797 .756 3 .915 .889 .864 .840 .816 .794 .772 .751 .712 .658 4 .888 .855 .823 .792 .763 .735 .708 .683 .636 .572 5 .863 .822 .784 .747 .713 .681 .650 .621 .567 .497 6 .837 .790 .746 .705 .666 .630 .596 .564 .507 .432 7 .813 .760 .711 .665 .623 .583 .547 .513 .452 .376 8 .789 .731 .677 .627 .582 .540 .502 .467 .404 .327 9 .766 .703 .645 .592 .544 .500 .460 .424 .361 .284
10 .744 .676 .614 .558 .508 .463 .422 .386 .322 .247
15 .642 .555 .481 .417 .362 .315 .275 .239 .183 .123
20 .554 .456 .377 .312 .258 .215 .178 .149 .104 .061
25 .478 .375 .295 .233 .184 .146 .116 .092 .059 .030
30 .412 .308 .231 .174 .131 .099 .075 .057 .033 .015
35 .355 .253 .181 .130 .094 .068 .049 .036 .019 .008
40 .307 .208 .142 .097 .067 .046 .032 .022 .011 .004
Example: How much money do you need to invest today at an assumed 6% interest rate, compounded annually, that will grow to $100,000 in 15 years?
Locate the factor, .417 where the columns for 6% and 15 years intersect. Multiply the factor by $100,000 for your answer, $41,700.
The following table will help you determine the amount of money you need to save or invest each month to reach a specific goal.
YEAR 3% 4% 5% 6% 7%
1 12.195 12.260 12.325 12.390 12.455
2 24.756 25.010 25.266 25.523 25.782
3 37.123 38.271 38.855 39.445 40.041
4 51.019 52.062 53.122 54.202 55.300
5 64.745 66.404 68.103 69.844 71.626
10 139.802 147.195 155.023 163.310 172.084
15 226.814 245.489 265.956 288.389 312.982
20 327.684 365.079 407.538 455.774 510.599
25 444.621 510.579 588.237 679.771 787.767
30 580.182 687.601 818.859 979.531 1176.509
35 737.335 902.860 1112.980 1380.280 1721.090
40 919.518 1164.860 1488.560 1916.960 2485.520
8% 9% 10% 12% 15% 1 12.520 12.585 12.650 12.780 12.975
2 26.042 26.303 26.565 27.094 27.896
3 40.645 41.255 41.872 43.125 45.056
4 56.417 57.553 58.709 61.080 64.789
5 73.450 75.318 77.230 81.189 87.482
10 181.372 191.203 201.608 224.273 263.441
15 339.945 369.507 401.922 476.435 617.356
20 572.940 643.850 724.529 920.830 1329.206 25 915.286 1065.961 1244.090 1704.007 2760.989 30 1418.306 1715.430 2080.849 3084.232 5640.818 35 2156.350 2713.050 3425.890 5516.660 11433.182 40 3241.800 4249.640 5594.610 9803.428 23083.693
Example : You have set a financial goal to accumulate $50,000 in 15 years, and you want to determine how much you need to save monthly at an assumed 6% interest rate for 15 years. Locate the factor, 288.389, found where the columns for 6% and 15 years intersect. Divide the targeted amount of $50,000 by the factor and you come up with the amount of $173.38 that must be saved monthly to reach your goal.
HOW MUCH YOU NEED TO SAVE EACH MONTH AT 6% TO REACH A SPECIFIC GOAL5 $143 $358 $716 $1,432 $3,580 $7,160 $14,320 10 61 153 306 612 1,530 3,060 6,120 15 35 88 176 352 880 1,760 3,520 20 22 55 110 220 550 1,100 2,200 25 15 38 75 150 375 750 1,500 30 10 25 50 100 250 500 1,000
Whether you are planning to save for a car, home, and child’s education or for retirement, the above table will quickly provide a reference point. To determine amounts not shown, for example, how much must be saved monthly at 6% to have $30,000 at the end of 10 years. First locate the columns where 10 years and $10,000 intersect and multiply the number 61 by 3 to get your answer of $183 a month.
The earlier you start, the less money you need each month to reach your financial goal. For example, you need to save $358 per month, earning 6% compounded annually, for 5 years, to accumulate $25,000. However, if you started 5 years earlier, you would only need to save $153 per month, at the same compound annual rate to reach $25,000.
AMOUNT REQUIRED TO BE INVESTED ANNUALLY IN ADVANCE TO GROW TO $1,000END OF INTEREST RATE
YEAR 3% 4% 5% 6% 7% 8% 9% 10% 12% 15% 1 970.87 961.54 952.38 943.40 934.58 925.93 917.43 909.09 892.86 869.57 2 478.26 471.34 464.58 457.96 451.49 445.16 438.98 432.90 421.16 404.45 3 314.11 308.03 302.10 296.33 290.70 285.22 279.88 274.65 264.60 250.41 4 232.07 226.43 220.96 215.65 210.49 205.48 200.60 195.88 186.82 174.14 5 182.87 177.53 172.36 167.36 162.51 157.83 153.32 148.90 140.55 128.98 6 150.09 144.96 140.02 135.25 130.65 126.22 121.95 117.82 110.02 99.34 7 126.71 121.74 116.97 112.39 107.99 103.77 99.72 95.82 88.50 78.57 8 109.18 104.35 99.74 95.32 91.09 87.05 83.19 79.49 72.59 63.35 9 95.57 90.86 86.37 82.10 78.02 74.15 70.46 66.95 60.43 51.80 10 84.69 80.09 75.72 71.57 67.64 63.92 60.39 57.04 50.88 42.83 15 52.20 48.02 44.14 40.53 37.19 34.10 31.25 28.61 23.95 18.28 20 36.13 32.29 28.80 25.65 22.80 20.23 17.93 15.87 12.39 8.49 25 26.63 23.09 19.95 17.20 4.78 12.67 10.83 9.24 6.70 4.09 30 20.41 17.14 14.33 11.93 9.89 8.17 6.73 5.52 3.70 2.00 35 16.06 13.06 10.54 8.47 6.76 5.37 4.25 3.35 2.06 .99 40 12.88 10.12 7.88 6.10 4.68 3.57 2.71 2.05 1.16 .49
Example: How much money do you need to invest annually each year that will grow to $100,000 in 20 years at an assumed 6% interest rate compounded annually? Locate the factor (25.65) where the columns for 6% and 20 years intersect. Multiply the factor by 100, since the table is bas
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