Women – A Girl Needs Cash

Are you thinking – how much money will I need to have invested so that I reach a point in my life where I will no longer have to work – and maybe I work only because I chose to? Imagine – you get up every morning knowing that you completely design your day and that your financial needs are handled. Will you want to alter your lifestyle a few years from now?

Let’s say you’re now forty years old. You’re single with an annual income of $35,000. Your closet holds clothes you adore, you eat out occasionally, go to the movies on weekends, go to concerts every now and then, and enjoy a vacation away from home once a year. Or perhaps you’re married with a joint income of $60,000. You and your husband go away to a country cottage on weekends, drive two cars, play tennis and golf, entertain friends, and travel each year.

Now, how much cash will you need in order to continue that lifestyle once you stop working? The temptation is to say, “A lot.” But how much is a lot? And where is it going to come from? There’s an old saying about how you find wealth: You can marry it, inherit it, or earn it. (Of course, you can also steal it-but stealing rarely works for long run, and we’re going to keep things honest here.) Let’s say the only wealth you have and are likely to have is what you earn. And with your $60,000 salary, you spend about $4,000 a month for mortgage payments or rent, car payments, clothes, food, entertainment, and credit cards. To maintain this lifestyle, you’ll need to have invested $600,000 by the time you stop working so that at a (fairly typical) 10 percent rate of return, you and your husband can continue to receive the same income as you do now- $60,000 a year.

Similarly, with a yearly income of $35,000, you’ll need to have invested $350,000 by the time you ease out of working in order to support your lifestyle.

Basically, then, you can add another zero to whatever you currently earn to determine a ballpark figure of how much you will need to have by the time you ease out of working so that you can maintain your present cash flow.

Of course, inflation changes that canvas. You won’t know what the rate of inflation will be at the time you decide to stop working, but inflation has been running at an average rate of 3 percent per year for the past decade. A moderate inflation rate, like the one we’ve experienced over the past decade, will increase the amount of savings you will need by a greater or lesser extent, depending on how far into the future you plan to live on the cash flow from your investments.

Now, that $600,000 we just discussed might seem like a whole lot of money. But let me tell you about a jewel for your financial treasure chest. This second gem is called the “Rule of 72.” It’s a simple mathematical calculation to help you understand the growth of your money. Here’s how it works. Take whatever rate of return you expect to earn, and divide the number 72 by it to determine how many years it will take for your money to double at that rate.

For example, let’s say the rate of return you use is 12 percent, as an average rate of return in the stock market. Divide 72 by 12. This equals 6. That means it will take seven and a half years for our money to double at that rate. Why use the stock market? Because it’s the fastest and most proven way to double your money. In 1995-an exceptional year for the stock market-the market gave returns of 36 percent to investors, which means that at that rate, if you got this return in the stock market, your money would double in two years. A savings account at a bank currently averages 3 percent, and it would therefore take twenty-four years for your money to double. Underlying the Rule of 72, then, is the principle that a fair rate of return makes a significant difference in the growth of your money.

According to the Rule of 72, if you’re forty years old, money you’ve invested now at an expected growth rate of 12 percent can double four times by the time you reach sixty-four. Thus, if you have already invested, for example, $40,000, it can double four times to $640,000 in twenty-four years. (It would grow to $80,000 at age forty-six, $160,000 at age fifty-two, $320,000 at age fifty-eight, and $640,000 at age sixty-four.) So, as you can see, if your investments are working for you, your money naturally grows so you can reach the $600,000 we talked about.

The Rule of 72 is a handy tool for forecasting the growth of your money and determining its future potential for you. And it exemplifies the power money can have for women. Who would want to miss the opportunity to put this resource to work in her life?

Voila!, by adding a zero to your current income you will determine how much money you target to save – and by saving dollars in an investment account – and monitoring the growth of this money on a yearly basis you can determine how quickly you will be a girl with cash and the financial freedom that you can create for yourself.

Source by Joan Perry

Tags: #Cash #cinta dan rahasia #family #girl #health #keluarga #kesehatan #lifestyle #love #marketing #marketing plan #marketing strategy #Women

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