The Secret to Wealth Is Understanding Savings Interest Rates

Can you measure your money? Many books and article are written every year about how to budget your money or raise or find the money so you can achieve any objective you want. You'll see illustrations, charts and big long descriptions showing all the various different choices, the best interest rates on savings and the best savings account. Yet there is a very basic principle you need to understand that is not covered in virtually all the information available. That gem; that thing you must understand is how to measure what money must do in order for you to achieve your dreams.

This article should fire the desire in your mind to acquire and accumulate money. I am about to introduce to you what must happen to every dollar you save. That is the prerequisite to everything else you are about to learn about money.

Everyone is capable of obtaining money, but it is of little use to them if they do not know how it must work for them. You are about to learn what no one has ever told you about making money.

Here is a simple formula. TMR = O Time, Money, Return = Objective

For example if your objective is $58,000 with $10 per month.

The questions are, how much time? and at what rate of return? The answer is $10 per month at 10% return for 40 years equals $58,000.

Ah, but there are alternatives! $58,000 can also be achieved in 20 years if $76 is invested at 10%. Or you could invest $275 at 10% for 10 years. If after researching bank interest rates, you were to accept less return, say 6% it would take $29.50 per year for 40 years. How do you know if the money is working for you or for someone else? That is why you must know to measure what money can do.

If the average person saved $120 per month and put that money into a high interest savings account with a no risk return of 6% for 40 years they would have $236,260 in 40 years. The above has been an example of how to measure what money in relation to time and return. It shows what amount of money is required in relation to time to achieve the same objective at the same return.

What can that $58,000 do for you? At 5% it will provide an income of $2,900 per month for the rest of your life. If you increase the return to 6% you would be provided with $3,480 per month.

I have published this article on my blog and to better illustrate the points made in this article I have published two tables. The first show what happens when one dollar is saved each year over time from 5 to 40 years and savings interest rates from 1 through 15 percent. The second chart shows the working life of a single dollar from 5 to 65 years, with a rate of return from 1 to 15 percent.


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Go to http://getinthewealthgame.com/?p=13 to view the tables. Of course there are a lot
more money ideas and topics to cove in order to become truly financially free. I
also offer advanced financial education training through our wealth management
group trainings at http://yourwealthadventure.com