An economist is someone who didn't have enough personality to become an accountant.

Go to Jokes & Quotes page

Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell. - Jr Murchison

Go to Jokes & Quotes page

Holiday savings plan – a true story.

Holiday time

Here’s a story that may sound familiar. I was talking recently to a young couple who returned from a fantastic holiday around Europe for six weeks. They had a great time travelling to England, Wales, France, Barcelona and Singapore but upon returning home they went back to work and soon the trip became a distant memory.

They had saved $17,000 in six months to go overseas but are now saving very little. Instead they are going out eating nice dinners and generally spending more money than they should be.

Saving time

Why do people change because they want a fantastic holiday? Imagine if you told them if they could save the same amount for 7 years the returns on a good investment plan would be well on the way to equaling their yearly savings!!! Imagine that. Relax a lot more and be able to work less and enjoy life more. How many people actually take action to initiate a plan like this? Unfortunately the answer is not very many. Most people are not willing to make the sacrifices to make it work properly.

The maths 

I was surprised myself when doing the simple maths for this example. As can be assumed from my post What’s the Rule of 70? you could expect to double your money invested after 7 years at 10% return. Unfortunately, not many people have a large amount of money lying around to invest for 7 years. What if you can forgo life’s luxuries for a few years and take only local holidays.

Let’s do the sums with the Savings Calculator.

$17,000 for six months, equals a $34,000 yearly wage, divided by 12 monthly terms = $2,833 per month.

Using the Savings calculator  above – input $2,833 in Planned monthly savings, 7 in Years to save and a 10 in Interest rate received. 

Wow!! You should have a result of $354,778. Even at a 5.5% return rate your answer should be $296,498.

You may say it’s hard to be so disciplined but look at the possible returns and eventual totals. A return of 5.5% per year should be easy. Over a ten year period since 2004, many Investment Funds (unit trusts) had returns of between 7-14%. Plug those results into the Savings Calculator and you will see a substantial increase in the totals.

I’m currently researching a way to offer readers a choice of banks, insurance and investment opportunities. Any way to save a buck and have a good product choice without so many fees etc. is an opportunity that shouldn’t be ignored. I’ll keep you posted but I hope to have something on offer within the next few weeks.

Keep saving! Remember it’s Your Savings !!

 

 

Get free updates
If you like this - please join us