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Example 4:  Yearly Occurrence Money Saving Opportunity

Let's go shopping for Home Owners Insurance. You do your research and get it down to two companies. The first company covers everything you are looking for and charges $1,500. The second company has the same product but it's $300 cheaper on the yearly premium. The more expensive company was recommended by a friend and it's only $300 more per year. It only averages out to $25 more per month which doesn't sound like enough to sway your decision.

 

For Frequency, choose "Yearly".

 

For More Expensive Choice, enter $1,500.

For Less Expensive Choice, enter $1,200.

This gives us a difference of $300.

 

Now we'll choose our Investment Type.

Let's toss it in stocks at 10%.

 

For Current Age, we'll make our example 35.

For Future Value Age, enter 55 which is when our example would like to retire.

Processing Years is set to 20 (55-35).

 

Our 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 $300 is worth when invested at 10% for 20 years? Just in principal we're talking about $6,000. Remember, in this example, we're adding an additional $300 to the total every year.

 

Adding $300 to your investment every year for 20 years at 10% continues to grow to $18,901. Now, how much fun will it be to go look for other yearly savings you can start to invest?

 

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