Example 1: One-Time Purchase Money Saving Opportunity
Let's go TV shopping. You do your research and narrow it down to two models of different sizes and options. The first TV is huge and has every option for $4,000. The second option is slightly smaller and has a slower refresh rate, but it's $2,800. Spending $4,000 on a TV is stretch for you, but you can do it. Besides, it's only $1,200 more, right? Technically, "Yes"; theoretically, "No". How much are we really subtracting from our future bottom line?
For Frequency, choose "One Time Purchase".
For More Expensive Choice, enter $4,000.
For Less Expensive Choice, enter $2,800.
This gives us a difference of $1,200.
Now we'll choose our Investment Type.
Let's toss it in stocks at 10%.
For Current Age, we'll make our example 27.
For Future Value Age, enter 55 which is when you want to retire.
Processing years is set to 28 (55-27).
Those numbers are run through an Interest Formula and the result is shown in Future Value.
Do you have a guess at what the $1,200 is worth when invested for 28 years averaging 10%? Do you think the money doubled? Tripled? More?
In this example, the $1,200 continues to grow to $17,305. Understanding this example is a Wealth Building Block toward wealth - your wealth. Armed with this type of knowledge, you can turn everyday financial decisions into future opportunities. Even if you chose Bonds at 5.5% and set Processing Years to 20, the money still triples.