X-Message-Number: 4855 From: Date: Thu, 7 Sep 1995 21:58:25 -0500 Subject: Money matters Well, of course money matters, you say, after reading the subject line. But since Mike Darwin listed so many varied ways in which godawful amounts of money have been "invested" wisely or foolishly, I thought I'd make a few notes. 1. Saving 10% of your income each month for 100 years can create a tremendous amount of accumulated wealth, even at 3% interest. If you enjoy playing with spreadsheets, set that one up. Start with whatever you're making now, adjust your income upwards at whatever rate you think is rational, keep a line of what you are adding to savings, and keep track of accumulated savings and interest. You may be startled what your commitment to longevity can do for your personal wealth. 2. Double digit return on investment is really quite common in a variety of managed securities activities. I have a very reputable money manager who is based in Austin who manages about $10 million of assets for various individuals. He requires $50,000 as the minimum amount he'll manage for you, but as Mike points out, quite a few of us play at the level where $50K is available for investment purposes. Paul, my Austin contact, gets between 20% and 28% annual return, using a variety of carefully hedged investment mechanisms involving mostly bonds and stock index derivatives. Such approaches are fiscally conservative and successful year after year. (Paul hasn't had a down year in the last 10. In 1987, when the stock market plunged, funds under his management earned 18% return.) 3. If you take the first spreadsheet I described above and, after saving up $20,000, take half that amount and place it in a higher interest rate certificate of deposit or mutual fund, earning between 5% and 10%, you see a tremendous improvement of your standing after 100 years. Then, when you've accumulated $100K, take half of that and place it with a money manager who can keep it growing at 20% per year. You'll soon see your situation improving markedly. Of course, it is very hard to treat the money you are saving as a completely independent fund, not to be spent in principle nor in interest. But with a little discipline, you can see how spending 90% of what you are spending today will go just about as far. And the end result can be staggering. Go ahead, work it out. In a few days I'll post my initial conditions and my 100th year results. Jim http://www.phoenix.net/~medical/ Rate This Message: http://www.cryonet.org/cgi-bin/rate.cgi?msg=4855