“Get A Little Richer Everyday”

By

Jason Hull

– May 21, 2009Posted in: Saving

I’ve come to the realization that every day I am a little richer than the day before.  I had never thought of saving and investing it in this way.  It seemed to give me a great sense of pride and feel really good about how I manage my money. 

 As long as I am spending less than I am taking in each day on average, I am building wealth.   Take a look at these numbers I crunched to show how rewarding saving can be.  Here are the numbers compounding quarterly with 5% annual return (1.25% Quarterly).

 

 

  

 Annuity Calculation        FV(A) = A*( (1+i)^n-1)/i    

 

      Here is an example of what the value of $2.08/day is worth in 20 years at 5% return.

          Qtr. Payment = ($2.08*365/4) = $189.80

            FV(A) = $189.80*((1+.0125)^80-1)/(.0125)

             FV(A) =$25,835.35

              $25,835.35/20 years = $1,291.77 per year

1.  FV (A) is the value of the annuity at time n

2.  A is the value of the individual payments in each compound period

3.  i is the interest rate for each payment

4.  n is the number of payment periods. In this case 80 periods (20 *4)

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15 Comments

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   Posted July 19, 2009 at 6:56 PM

   Thank you for your comments. More updates available soon.

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