Wednesday, September 24, 2014

Financial Thought of the Day September 24, 2014: A Penny Saved is a Penny Got

I would very much recommend this Forbes blog that talks about the financial and business wisdom of Benjamin Franklin. Benjamin Franklin talks about the importance of staying out of debt and acquiring valuable skills as evidenced by his quote, “There’s more old drunkards than old doctors". The blog also goes on to talk about misnomers. For example the authors point out that Ben Franklin never said "A Penny Saved is a Penny Earned" but rather said "A Penny Saved is a Penny Got" in the preface to his 1758 almanac.

In the honor of the phrase "A Penny Saved is A Penny Got" let's see what a penny will get you compounded at various interest rates over a period of 30 years:

10%--Historical return of the stock market--.01 x (1.10^30) = $0.17

22%--Fantasy super investor return--.01 x (1.22^30) = $3.90

Now imagine savings dollars, tens of dollars, and hundreds of dollars.

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