Coming Someday

     Welcome to Dynamics of Wealth.  What you are about to experience may change your life.  At least, we hope it does.  Relax, we are not here to sell you anything;  This is completely free.  We have long thought that the level of financial education in our country has been lacking.  We see it all the time, with people making poor decisions, and ending up in fiscal straits, or not saving enough for retirement.  We want to change that.  Fortunately, the internet has introduced some new visualization tools that allow a better understanding of financial growth, and other tools that simplify the arithmetic and calculations needed to understand the dynamics.  That is why we are here. 

      We want this program to be useful to and understandable by persons of all ages and mathematics skills.  It certainly should be taught in our high schools and to our younger adults, but it is important that no one be intimidated by the mathematics.  We may show some mathematical formulas to illuminate the basis of the dynamics, but, relax, you do not need to memorize the equations, and there will not be a quiz.  We all remember how our eyes glazed over during math class.  We won't let that happen here.  Many of us have spent time learning and using complicated financial calculators such as these..  Some have tried to build spreadsheets to help understand and calculate loan balances, budgets, account performance, savings, and so forth.  If we do our job right, we will make those calculators and spreadsheets obsolete.  Our goal is to make finances, and the time value of money simple and understandable.  Just sit back, relax, and absorb the ideas behind the dynamics we are about to present.  And, don't forget to show this to your children and grandchildren.  If you know of someone who could benefit from these tools, please click the Share link, which makes it easy to share via email or one of the social media links, like Facebook, Twitter, etc.

      So, what is Wealth?  It may not be what you think.  Fancy cars?  Big houses?  Designer clothes?  A private jet?  Actually, it's not fair for me or anyone else to define wealth for you.  That is something each of us gets to define for ourselves.  Yes, wealth can include those things, if that is how you wish to define it for yourself.  But, let me tell you, I know plenty of people with expensive cars that don't like driving them, and dread the repair bills.  And lots of people in big houses that are lonely inside, and where the owners have to work long hours just to pay the mortgages.  Yachts?  Jewelry?  Fancy restaurants?  Designer handbags?  We will devote an entire episode to frugality and deferred gratification later, but you can look and feel good for a lot less money, and, let's admit it, some of those people look ridiculous in their designer clothes.  But let's say you define your own wealth to include a Ferrari, and big house, and some overpriced accessories.  That's fine, too, but, how do you get there?  We want to show you the path.  The following tools will help you determine the steps you need to take to obtain the level of wealth you define for yourself.

      Wealth, to me, is something quite different.  Wealth is freedom.  Wealth is the ability to live life on your own terms, free from financial worry.  True wealth means you may not necessarily have to work for a living, although many wealthy people choose to work, because they love what they do.  That is the path we want to outline here.  We will help you get to the point where your money works for you, instead of the other way around.  Will you save enough for retirement?  How long will you have to work before you can retire?  We will help you to answer those questions.  Financial freedom is the goal, and we offer you some powerful tools to help you get there.  So, let's get started...

      I hold in my hands a Civil War bond, from 1864.  A bond is essentially a loan, with interest paid back to the bondholder.  This bond is for $1000, and pays 10% interest.  That means the purchaser of this bond paid the government $1000, and the government pays him 10% interest every year until the bond is cashed in.  Let's assume this is a zero coupon bond, like a savings bond, where, instead of the government sending the bondholder a check for the 10% interest, or $100, every year, the interest just accrues, and the bondholder will receive the original $1000, plus all the accrued interest when the bond is cashed in.  What is this $1000 bond worth today, after accruing 10% interest for 148 years?  Well, you have the original $1000.  10% interest is $100.  Times 148 years, is $14,800. Plus the original $1000 is $15800, right?  Not quite.  I tricked you there.  You see, every year, the value of the bond grows by 10%.  So, the next year, the interest is no longer just 10% of the original $1000, but 10% of the new higher number, after accrued interest to date.  Confused?  Don't be.  What I am about to show you is the concept of "compounding", or exponential growth, which works like magic on your financial nest egg.  You've heard the phrase, "Time value of money".  What does that mean?  Well, let's take a look.  Again, it is important that no one be intimidated by the math here.  Just relax, and watch, and try to understand the concept I am about to demonstrate.  You do not need to memorize the formulas, just the concept, so I am going to go through this rather quickly.  Take a deep breath. 

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