Future value is the amount your original deposit will be worth in the future based on earning a specific interest rate over a specific period of time. Figure out how much your savings will earn and grow by multiplying the principal by the annual interest rate and then adding that interest amount to the principal. (more…)

You can also use present value calculations to determine how much you would need to deposit so you can take a specific amount of money out of your savings account for a certain number of years. This is knows as series of deposit. If you want to take $400 out of your account each year for nine years, and your money is earning interest at 8 percent a year, how much money would you need to deposit now? Part D of Figure 1.4 will help you find the answer. Find Year 9 in the left column and look across to the 8 percent interest-rate column. The value given is 6.247. Multiply this value by the amount of money that you want to take out every year:

$400 X 6.247 = $2,498.80

You need to deposit $2,498.80 now to be able to take out $400 each year for nine years. This calculation is used for retirement.

Some savers and investors like to make regular deposits into their savings. You can also do the same to increase your savings. A series of equal regular deposits is sometimes called an annuity. Use Part B of the chart in Figure 1.4 (future value of a series of equal yearly deposits) to find out the future value of $1,000 a year at 5 percent annual interest for six years. At the end of the six years, you would have $6,802:

$1,000 X 6.802 = $6,802

Is your investment dissatisfying your earnings? Did your broker put your investments continued to decline in 2009? In this situation, you will need to refresh yourself with some basic information about money management and investing. The investment should not be scary, difficult or time consuming even for average person. By knowing a few simple steps to become your own money manager, you can realize your investment can grow your money and reduce your stress and anxiety. (more…)

Intuitively, many people know that if interest rates are low is not the time to spare, and if interest rates are high is not the time to invest (at least borrowing). Therefore, people are always outstanding read the newspaper, listen to the news on television and listen to renowned economists to know your views on the future of interest rates. (more…)

The joys of compounding don’t end there. For one thing, if you have a certain goal in mind (say, you plan to buy a house in 10 years and figure you’ll need $20,000 for the down payment), compounding lets you figure out how much you’ll need to set aside on a regular basis and what sort of return you’ll need to reach your goal. In the preceding example, if you’ve got 10 years to invest and assume that you can earn 10% a year (not an unreasonable assumption), then all you need to do is set aside about $96 a month to achieve your targeted down payment goal. (more…)

Speaking of the long haul, there are several compelling reasons why investing should always be looked at as a long-term proposition. The first is sheer practicality. Few of us have either the time or the knowledge to be truly active traders if you don’t have the necessary expertise or the time to steer the ship, your Titanic is headed straight for an iceberg (what a night to remember that would be). The second is cost. One thing that Wall Street and other “real-life” movies that address the world of investing (there’s today’s oxymoron) tend to gloss over is that every time you buy or sell something, you pay a commission to someone, somewhere (a commission is essentially a fee you pay to have your investment decision carried out and can run the gamut from dirt cheap to the out-and-out exorbitant). (more…)

This category takes in various forms of investments offered by the federal government. They include one thing you may already know the good old U.S. savings bond. Others include such investments as Treasury bills and Treasury notes, all of which offer various types of returns. In so many words, government securities are IOUs to the federal government you lend it and allocating money for a period of time, and it repays you with interest. (more…)

The concept theory of the how certificate deposit works is easy to understand for common people with or without knowledge in investments. Certificate deposit is investment instrument with fixed income and in time-based. It is released by a financial institution and pays your interest for a guaranteed rate over a given period. (more…)

There are several factors that contribute to the annuity return of payment:
1. Rate of return gained by the fund
2. Distribution procedure of funds to beneficiaries (can raise or lower your monthly annuity return) (more…)

One of the most well-known types of certificates of deposit in term of duration term is certificates of deposit of 6 months. But do you know that certificates of deposit are available with maturities between 7 days to 10 years? In the course of the certificates of deposit, your money you’ve invested is difficult to withdrawn, unless you want to get hefty consequences. (more…)