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Text File  |  1994-10-15  |  6KB  |  112 lines
  1.           
  2.           
  3.           
  4.                               Time and Growth
  5.           
  6.           
  7.                Time is a vital factor in accumulating wealth. 
  8.           The following tables illustrate the effect of time and
  9.           after-tax interest in accumulating funds.
  10.           
  11.           
  12.                   GROWTH OF A SINGLE LUMP SUM INVESTMENT
  13.           
  14.                            ╔══════════╤═══════════════════════╗
  15.                            ║ Years of │ $10,000 Compounded at ║
  16.                            ║  Growth  │      6%   │     10%   ║
  17.                            ╟──────────┼───────────┼───────────╢
  18.                            ║     5    │  $ 13,382 │  $ 16,110 ║
  19.                            ║    10    │    17,908 │    25,940 ║
  20.                            ║    15    │    23,966 │    41,770 ║
  21.                            ║    20    │    32,071 │    67,270 ║
  22.                            ║    25    │    42,919 │   108,350 ║
  23.                            ║    30    │    57,435 │   174,490 ║
  24.                            ║    35    │    76,861 │   281,020 ║
  25.                            ║    40    │   102,857 │   452,590 ║
  26.                            ╚══════════╧═══════════╧═══════════╝
  27.           
  28.                In other words, in a period 8 times longer - (40
  29.           years rather than 5 years) the investment result at 10%
  30.           is 28 times greater growth ($452,590 divided by
  31.           $16,110).
  32.           
  33.           
  34.           GROWTH OF A FUND TO WHICH $2,000 IS ADDED
  35.           AT THE BEGINNING OF EACH YEAR
  36.           
  37.           
  38.           ╔═════════╤═══════════╤═══════════╤═════════╤═════════╗
  39.           ║  $2,000 │           │           │         │         ║
  40.           ║ Per Year│   Total   │    Will   │         │ Percent ║           
  41.           ║  at 6%  │Contributed│  Grow to  │ Growth  │Increase ║
  42.           ╟─────────┼───────────┼───────────┼─────────┼─────────╢
  43.           ║    5    │ $ 10,000  │ $ 11,951  │$  1,951 │   20%   ║
  44.           ║   10    │   20,000  │   27,943  │   7,943 │   40%   ║
  45.           ║   15    │   30,000  │   49,345  │  19,345 │   64%   ║
  46.           ║   20    │   40,000  │   77,985  │  37,985 │   95%   ║
  47.           ║   25    │   50,000  │  116,313  │  66,313 │  133%   ║
  48.           ║   30    │   60,000  │  167,603  │ 107,603 │  179%   ║
  49.           ║   35    │   70,000  │  236,242  │ 166,242 │  237%   ║
  50.           ║   40    │   80,000  │  328,095  │ 248,095 │  310%   ║          
  51.           ╚═════════╧═══════════╧═══════════╧═════════╧═════════╝
  52.           
  53.           
  54.                These tables assume a 6% rate of return after
  55.           taxes and that the earnings are reinvested.
  56.           
  57.           
  58.               How the Dollar Value of Time Helps Disciplined
  59.           Investors
  60.           
  61.                Below are two individuals who have different
  62.           attitudes toward investing. The early investor chooses
  63.           to begin investing $5,000 annually for retirement.  The
  64.           late investor waits ten years before beginning a
  65.           program.
  66.           
  67.                          Early Investor                Late Investor
  68.           
  69.           Age       Amount         Value               Amount         Value
  70.           
  71.           35       $5,000          $5,524                 0         0
  72.           36        5,000          11,626                 0         0
  73.           37        5,000          18,366                 0         0
  74.           38        5,000          25,813                 0         0
  75.           39        5,000          34,040                 0         0
  76.           40        5,000          43,128                 0         0
  77.           41        5,000          53,168                 0         0
  78.           42        5,000          64,258                 0         0
  79.           43        5,000          76,511                 0         0
  80.           44        5,000          90,046                 0         0
  81.           45            0          99,475              7,500          8,285
  82.           46            0          109,891             7,500          17,438
  83.           47            0          121,398             7,500          27,549
  84.           48            0          134,111             7,500          38,719
  85.           49            0          148,154             7,500          51,059
  86.           50            0          163,667             7,500          64,691
  87.           51            0          180,806             7,500          79,751
  88.           52            0          199,738             7,500          96,387
  89.           53            0          220,653             7,500          114,765
  90.           54            0          243,759             7,500          135,068
  91.           55            0          269,284             7,500          157,496
  92.           56            0          297,481             7,500          182,274
  93.           57            0          328,631             7,500          209,645
  94.           58            0          363,043             7,500          239,883
  95.           59            0          401,059             7,500          273,287
  96.           60            0          443,055             7,500          310,190
  97.           61            0          489,448             7,500          350,956
  98.           62            0          540,700             7,500          395,991
  99.           63            0          597,318             7,500          445,742
  100.           64            0          659,865             7,500          500,702
  101.           65            0          728,962             7,500          561,417
  102.           
  103.                The early investor contributed $107,500 less than the late
  104.           investor, but outperformed the late investor by over $167,000. 
  105.           Let time work to your benefit!
  106.                There is also an insurance aspect here that is not shown by
  107.           the pure numbers.  The early investor is protected should he
  108.           become disabled or a bad economy limit his earning potential.  He
  109.           already has his money doing the work for him.
  110.           
  111.           
  112.