Maintain your old Siemens Hipath system

The Magic Of Compound Interest

Christians are called to be good stewards of God's resources. A steward can be described as someone who manages the resources of another. "The earth is the Lord's and all that is in it, the world and those who dwell therein"-Psalms 24:1 (The New English Bible). To effectively manage God's financial resources, it helps to have some understanding of modern day financial concepts, strategies, and mathematical formulas. Compound interest is a great ally in catapulting you toward achieving your financial goals. Through an understanding of compound interest, God can pour out a blessing upon you, which you will not be able to measure! Albert Einstein once called compound interest "the world's most impressive invention" and dubbed it the "eighth wonder of the world." Compound interest means all the money you've invested earns interest and then the combined amount of the original investments plus your interest earns more interest. Compounding means interest added to interest. Compound interest does not produce linear growth like the pattern 1, 2, 3, 4, 5, 6, and so on; it produces geometric growth through compounding like the pattern 1, 2, 4, 8, 16, 32, and so on. Usually, the more frequently your money compounds when earning interest, the better. For example, daily compounding is normally better than monthly compounding, which is better than quarterly compounding, which is better than yearly compounding.

A basic formula for compound interest is as follows:

FV = ID (1 + R)T, then FV ? ID

Where:
FV = Future Value
ID = Initial Deposit
R = Rate (interest rate earned)
T = Time (number of years invested)

Assuming the following investment--$10,000 Initial Deposit, 6% interest Rate, 5-year Time period, the math would work as follows:

FV = $10,000.00 x (1 + 0.06)5

Formula results by year are as follows:

Year 1 $10,000. 00 x (1 + 0.06)1 = $10,600.00

Year 2 $10,600. 00 x (1 + 0.06)2 = $11,236.00

Year 3 $11,236. 00 x (1 + 0.06)3 = $11,910.16

Year 4 $11,910. 16 x (1 + 0.06)4 = $12,624.77

Year 5 $12,624. 77 x (1 + 0.06)5 = $13,382.26.

Then FV ? ID = $13,382.26 - $10,000.00 = $3,382.26 (Total Interest Earned).

The effect of the individual parts of the formula in combination with each other produces synergistic results in the outcome that are greater than the sum of its parts individually. In other words, small increases in any of the components can have a dramatic incremental effect on the total compound interest earned.

Another useful tool in approximating the magic of compounding is the "Rule of 72." Albert Einstein is credited with discovering the compound interest Rule of 72 and said, "It is the greatest mathematical discovery of all time." The Rule of 72 is a mathematical way of approximating the number of years it takes an investment to double in value. You estimate the number of years for an investment to double by dividing 72 by the annual rate of return. For example, if you expect to earn a 10% return on your $10,000 investment, then 72 divided by 10 = 7.2 years for your investment to double in value to $20,000. Conversely, if you expect your $10,000 investment to double in 7.2 years and you want to know the interest rate needed, you simply take 72 divided by 7.2 = 10% interest. You can even use it to compare stock market interest rate returns to other investments. For example, assume you are looking at lots with a real estate agent. The agent tells you the properties have doubled in value during the last 14 years. You could get a quick estimate of the increase per year in value by doing the following math: 72 divided by 14 = 5.14% per year.

There is one formula that is infinitely more important than even the "Rule of 72": "1" cross + "3" nails = "4" given. Praise God!

Bill G. Page is the author of Making Money Work: A Christian Guide For Personal Finance. This book explains the "Rule of 72" and many other financial concepts. It includes a CD ROM so you can easily calculate compound interest and lots of other complicated financial formulas. The book can be ordered from www.MakingMoneyWork.us or you may request the book from your local Christian bookstore-available to retail stores through Spring Arbor and Appalachian Christian book distributors beginning in September 2005.

This article is adapted from Making Money Work: A Christian Guide For Personal Finance with permission of Willie Glenn Page, Inc. Copyright 2005.

Bill G. Page
Making Money Work: A Christian Guide For Personal Finance (book and CD ROM)
http://www.MakingMoneyWork.us

In The News:

British government worker detained in China, officials confirm
Wed, 21 Aug 2019 08:42:00 +0100
A worker at Britain's Hong Kong consulate has been detained for allegedly violating the law, the Chinese foreign ministry has said.

Vatican's banker loses child abuse conviction appeal
Wed, 21 Aug 2019 02:23:00 +0100
The most senior member of the Catholic Church to be found guilty of child abuse has lost an appeal against his conviction.

Amazon burning: Forest fires on the rise at record rate
Wed, 21 Aug 2019 02:41:00 +0100
Wildfires in the Amazon rainforest have hit a record number this year, with 72,843 fires detected so far by Brazil's space research centre INPE.

Trump cancels Denmark trip because Greenland is not for sale
Wed, 21 Aug 2019 03:34:00 +0100
Donald Trump has cancelled a planned trip to Denmark because its prime minister dismissed the idea of selling Greenland to the US.

Trump: It would be appropriate for Russia to rejoin G7
Tue, 20 Aug 2019 21:51:00 +0100
Donald Trump has said it would be appropriate to let Russia join the G7 group of advanced industrialised countries.



tikatoshop.it

Erfahrungen mit Pallhuber Wein
Agen Bola SBOBET Terpercaya

Travel in comfort and at your leisure with CT Airlink Limousine & Car Service for top quality private transportation and exceptional customer service. We operate Sedans, SUVs & Vans for CT Car Services to covering all Connecticut airports including Car Service from CT to Newark Airport , Mohegan Casino Uncasville CT, Foxwoods Casino Mashantucket CT, Manhattan Cruise Terminal NYC, Brooklyn Cruise Terminal NYC and Bayonne Cruise Terminal NJ. CT Airlink hire licensed and friendly chauffeurs who have in-depth knowledge of the Areas.

5 Ways to Absolutely Destroy Your Finances!

Ben Stein has a book called How to Ruin Your... Read More

Planning Your Financial Future

Millions of people give a lot of thought to financial... Read More

10 Quick And Cheap Ways To Cut Your Heating Bill

When you received an energy (heating) bill last winter, were... Read More

Bank On It: Places to Hide and Invest Money

Today I passed a thermometer at a bank that read... Read More

Personal Finance ? Why You Should Compare, not Despair

Sorting out your personal finances can be a tricky and... Read More

Why You Should Seek Professional Help With Asset Management

Everyone needs to maintain their lives. What I mean by... Read More

Know Thy Finances

The first step to financial success lies in knowing your... Read More

Ways to Save Energy and Slash Electricity Bills

1. Lighting & Light Bulbs Install low energy light... Read More

UK Parents Inactivity Harming Their Children?s Future University and Mortgage Savings

The British government at the beginning of this year officially... Read More

Family Money Management: The Importance of Agreement

Are you having problems with debt? Are you afraid to... Read More

Roth IRA Contributions - IRS Rules

Confused about whether you can contribute to a Roth IRA?... Read More

UK Graduates Looking Short-Term At Their Long-Term Financial Responsibilities

With almost two thirds of university entrants from England and... Read More

Budgeting Tips to Save Real Money

Sticking to a budget can be difficult, but with so... Read More

Are You Ready To Be Fired?

Your boss has just informed you that your department is... Read More

Resources to Help You Learn About and Protect Yourself from Identity Theft

There is a new bill that is being passes, it... Read More

College Expenses: Seven Ways to Save on an Education

Many people graduate from college owing thousands of dollars in... Read More

Check Facts and Figures

Are you a check fanatic? Don't worry, you aren't alone.... Read More

Live Green; Save Green!

Have you seen the recent article on a new "green"... Read More

Planning Ahead with Your Finances

If you, like most people, have not seriously considered what... Read More

Succession Planning

Have you ever thought about what you are going to... Read More

10 Money-Saving Tips

1. If you have your haircut every 3 weeks, try... Read More

Budgeting is Essential for a Single Mothers Success

Today many women are struggling with debt and it's even... Read More

Can You Afford Not To Look After Your Personal Finances?

Investing is a subject a lot of people don't want... Read More

10 Tips To Save Money When Dining Out

Here are some tips that can help you save money... Read More

Money Saving Tips. Maximize Savings on Everyday Items!

Frugal living is more than a lifestyle. It's a passion.... Read More