Comments on: Three Principles of Personal Finance: #2 Make The Money You Have Work For You http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/ The blog of the free, simple personal finance solution. Track all your spending automatically, find the best deals, save more money. And save the world. Fri, 20 Nov 2009 20:48:42 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: David Mackey http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/comment-page-1/#comment-5243 David Mackey Sun, 30 Sep 2007 00:54:09 +0000 http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/#comment-5243 I'm not a big fan of stocks, but mainly b/c people don't embrace a long-term vision when buying/selling them which results in a lot of unnecessary market volitility. I’m not a big fan of stocks, but mainly b/c people don’t embrace a long-term vision when buying/selling them which results in a lot of unnecessary market volitility. ]]> By: Ben Korp http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/comment-page-1/#comment-5092 Ben Korp Fri, 28 Sep 2007 00:27:25 +0000 http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/#comment-5092 Good article. One point I'd make is that you have to take inflation into account when thinking about your future investments. Especially investments more than 10 years out. Recently, inflation has been running about 2 - 3.0% per year. Inflation eats away at your total -- $1 million dollars in 25 years will be worth much less than $1 million dollars today. Thus those huge totals that appear in the final column of the charts are not quite as large as they appear in terms of purchasing power. The easiest way to do this when working with compounded interest is to just subtract out inflation from the return rate. Thus, to estimate how much money you will have in today's dollars in 30 years at a 10% return rate with 3% inflation, you can calculate your total using a 7% rate (10% - 3%). Good article. One point I’d make is that you have to take inflation into account when thinking about your future investments. Especially investments more than 10 years out.

Recently, inflation has been running about 2 – 3.0% per year. Inflation eats away at your total — $1 million dollars in 25 years will be worth much less than $1 million dollars today. Thus those huge totals that appear in the final column of the charts are not quite as large as they appear in terms of purchasing power.

The easiest way to do this when working with compounded interest is to just subtract out inflation from the return rate. Thus, to estimate how much money you will have in today’s dollars in 30 years at a 10% return rate with 3% inflation, you can calculate your total using a 7% rate (10% – 3%).

]]> By: Aaron Patzer http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/comment-page-1/#comment-5086 Aaron Patzer Thu, 27 Sep 2007 19:20:17 +0000 http://www.mint.com/blog/finance-core/three-principles-of-personal-finance-2-make-the-money-you-have-work-for-you/#comment-5086 I highly recommend: 1. "The Richest Man in Babylon" as a great starting place on the power of compound interest. 2. "The Only Investment Guide You’ll Ever Need" as a short, but comprehensive guide to investment vehicles, retirement accounts, insurance, and ways to save on everyday costs. 3. "Stocks for the Long Run" as the most well-researched, easy-to-read book on an equity (stocks) heavy portfolio. I highly recommend:

1. “The Richest Man in Babylon” as a great starting place on the power of compound interest.

2. “The Only Investment Guide You’ll Ever Need” as a short, but comprehensive guide to investment vehicles, retirement accounts, insurance, and ways to save on everyday costs.

3. “Stocks for the Long Run” as the most well-researched, easy-to-read book on an equity (stocks) heavy portfolio.

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