Conquering Your Financial Empire

Investing at a Young Age

Published March 28, 2016 in Retirement Planning - 0 Comments

 

InvestingYoungTree

Planting the Money Tree Early

Why should I be investing at a young age?

I hear this question a great deal from my friends and a quick search on the internet finds it echoed frequently in online forums.  This makes me wonder, with all this literature out there, how come we don’t see more savings from young professionals?  I believe much of the answer can be explained by opportunity cost miscalculations (more on that later!), but I think a lot of people just simply don’t consider the numbers in visual terms.  Hopefully I can help with that.

I imagine most of you are familiar with the term compound interest; earning 5% on $100 one year means the next year you’re earning on $105, and so on and so forth.  I think the hardest part about compound interest is trying to visualize just how long it takes to make it worth something.  Coming back to the $100 example, consider this.  Annualizing at 5% a year, it will take you about fourteen years to have $200.  Why is that?  Compound interest is a geometric series – a progression in math where a sequence of numbers is multiplied by a common, fixed number which in this case 5% – so earning 5% on $100 nets you $105, and then next series will be the sum of $100 times 5%, plus $5 times 5% which is $.25.  Then the next series will have all that plus $.25 times 5%.  Conceptually, starting with $100, you’re adding $5 plus smaller and smaller increments with each compound.  If we weren’t using compound interest, it would take you exactly twenty years (100/5) to get an extra $100 – but adding those smaller and smaller increments shaves a cool six years off that total.  The power of compound interest is real!  Geometric series are a pretty neat thing to think about; however, understanding them, for the purpose of this post, isn’t necessary.  And no, there won’t be a quiz later.  So how does compound interest apply to you? Continue reading

Introducing the Cash Flow Celt

Published March 24, 2016 in Uncategorized - 4 Comments

Business, for as long as I can remember, has been my interest.  Personal finance, wealth accrual, corporations and stocks have been a passion to study since reading closing tickers in the newspaper over a bowl of Fruit Loops as a child.  I started reading the Wall Street Journal at around eight years old and had both Adam Smith’s Wealth of Nations and John Maynard Keynes General Theory of Employment, Interest, and Money finished by sixteen.  I’ve been reading treatises and classical philosophy since I was able to even remotely comprehend it.

I went off to college to major in economics and thought I was headed for law school upon completion.  My friends still argue that I am a prime candidate.  However, just before my last year, I decided that taking on an excessive amount of debt for a career I really wasn’t sure I was passionate about just didn’t make sense and I went into the workforce.  I’m currently with a local Sheriff’s Office and it’s been a learning experience for me, albeit a fulfilling one.  While working here I’ve learned simple things about life – about empathy, and listening, and how little kindness costs.  I’m also learning about who I want to be both personally and professionally going forward. Continue reading

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