Example 3: Monthly Occurrence Money Saving Opportunity
Let's go shopping for package deals from our friendly neighborhood media provider. They offer everything from one company on one bill - home phone, wireless phones, Internet access and television channels. You can get every deluxe package for $350/month, all basic packages for $225/month or get a package of the most widely used options for $290/month. You're trying to do the right thing and get the middle tier, but $60 more per month only averages $2 per day. Isn't that worth not worrying about the extra cost?
For Frequency, choose "Monthly".
For More Expensive Choice, enter $350.
For Less Expensive Choice, enter $290.
This gives us a difference of $60.
Now we'll choose our Investment Type.
Let's toss it in stocks at 10%.
For Current Age, we'll make our example 31.
For Future Value Age, enter 55, your target age to retire.
Processing Years is set to 24 (55-31).
The financial calculator runs these figures through an Interest Formula and the result is shown in Future Value.
Do you have a guess at what the $60/month is worth when invested for 24 years averaging 10%? The difference is $720 per year, which doesn't seem like that much money.
In this example, adding $60 to your investment every month for 24 years at 10% grows to $70,090. Are you kidding me? I'm betting most people would guess less than half that amount. Are you telling me that you can't find $60 per month to save and invest? Even if you know nothing about stocks and just put the money in a 5% CD, it grows to $33,643.