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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.

 

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