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Retiring a Millionaire

Retiring a Millionaire . Mathematical Applications in Agriculture. Building an Emergency Fund. Financial planners recommend: 3-6 months savings (liquid) available Example: $24,000 annual salary $8,000-$12,000 easily available You have to expect the unexpected!.

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Retiring a Millionaire

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  1. Retiring a Millionaire Mathematical Applications in Agriculture

  2. Building an Emergency Fund • Financial planners recommend: • 3-6 months savings (liquid) available Example: $24,000 annual salary $8,000-$12,000 easily available You have to expect the unexpected!

  3. Magic of Compound Interest • Compound Interest- Interest computed on the accumulated unpaid interest as well as the original loan principal.

  4. Automatic Savings Plans • Monthly deduction from checking account into a high yield retirement plan. • Moves the money at the beginning of the month or at a specified date. • Raises in salaries should be added to savings automatic deductions.

  5. Power of Compound Interest Saving $0.50 per day and allowing that money to be directly deposited into savings account.

  6. Plan One: $2,000 a year for six years • IRA- Individual Retirement Account • Account in which the government allows the owner to invest $2000 yearly and is not taxed until retirement (usually 65).

  7. Plan 2: Buy used and invest • Buy a new car instead of a new car and invest the interest. • Example: • New: 26,500 • Used: $19,000 • Difference:$7500 • Some money can be saved into emergency fund to take care of repairs.

  8. Plan Three: 25+10 • Age: 22 • $25 per month into IRA for first year • Increase in $10 per year, every year • Age 65: $1,830,000 • Disadvantages: • Life happens • Car • Marriage • Baby • Home

  9. Plan Four: 80-10-10 • 80% Living Expenses • 10% Charity or Tithe • 10% Invested in IRA

  10. Fluctuation in Interest Values • Examples: • Age 22-65 • $2000 per year for 43 years at 0.08% interest compounded monthly. • $839,054 • Age 22-65 • $2000 per year for 43 years at 0.09% interest compounded monthly. • $1,156,000

  11. The Rule of 72 • Refers to the process of dividing interest rate into 72. • Determines how long it will take money to double. • Example: • 12% interest rate • 72/12= 6 • 6 years to double money at 12% interest rate

  12. Mutual Funds • Mutual Funds- Investments made solely by a company on behalf of others. Must invest in 30 different stocks. • Professional management of money who devote full time attention to investment decisions.

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