A welcome initiative by LynnRE

**paddyfield** · 25-02-2008, 04:26 PM

Guinness is all Yogi talks about. Have one for me buddy :)
Thanks for your article Lynn, interesting.

I was listening to the radio this morning and the presenter was talking
to a finacial expert who manages accounts for some of the UK,s well off!
The subject of their discussion was a punter who risked 50 pence on a
8 horse accumulator and won 1 million pounds from the bookies!
Well done matey and I wish I had that kind of luck.
The sum knowledge from this expert was to stick it in the bank and earn
a higher interest rate of something like 8% p.a.
I dont know what the winners circumstances are or how old he is, but
£80,000 per year less taxes seems a poor option to me, if, like most sudden
winners of a large amount, he is going to move his lifestyle up a notche.
The bank is going to earn more than he does!

That brings me onto your discussion Lynn.
Anyone who is thinking of investing $25 per week or month is going to have
a hard time working that amount into a decent return for quite some time.
Are you concluding your information pack with the idea we form our own
investment club? I, m not knocking the idea, I think it is one direction we should
follow and really take control of our own finances rather than in dodgey internet
opportunities that turn out to be more opportunist for the owners than the
members.
I,m all for it if that is the intention.
Cheers
paddy

**LynnRE** · 25-02-2008, 06:11 PM

Originally Posted by paddyfield

Guinness is all Yogi talks about. Have one for me buddy :)
Thanks for your article Lynn, interesting.

I was listening to the radio this morning and the presenter was talking
to a finacial expert who manages accounts for some of the UK,s well off!
The subject of their discussion was a punter who risked 50 pence on a
8 horse accumulator and won 1 million pounds from the bookies!
Well done matey and I wish I had that kind of luck.
The sum knowledge from this expert was to stick it in the bank and earn
a higher interest rate of something like 8% p.a.
I dont know what the winners circumstances are or how old he is, but
£80,000 per year less taxes seems a poor option to me, if, like most sudden
winners of a large amount, he is going to move his lifestyle up a notche.
The bank is going to earn more than he does!

That brings me onto your discussion Lynn.
Anyone who is thinking of investing $25 per week or month is going to have
a hard time working that amount into a decent return for quite some time.
Are you concluding your information pack with the idea we form our own
investment club? I, m not knocking the idea, I think it is one direction we should
follow and really take control of our own finances rather than in dodgey internet
opportunities that turn out to be more opportunist for the owners than the
members.
I,m all for it if that is the intention.
Cheers
paddy

Good questions, and the answer is yes and no. How's that for straddling the fence. The $25 per week was for illustration purposes. If you can set aside more than $25 per week, definitely do so. I didn't mean that is all you should do. Some people will have a hard time doing this amount. Of course there are always things you can give up to allow you to set aside more each week. It just depends on whether or not you have the discipline and dedication to do so. Do you enjoy life's little pleasures now, or do you sacrifice them for your future nest egg? Only the person can determine what they are willing to give up and invest the money instead. That's why I said put it in a money market account. They usually pay a higher interest rate than your normal savings accounts. You might have to put your money into a savings account to accumulate enough to open a money market account later, but at least you start the process. One of the better interest rates I have seen of late is from ING Direct, or as I call it the Big Orange. Not only do they have slightly higher interest rates, they have great short term CD rates. Of course if you can get a CD account going, do so. I would just recommend you don't lock it up for more than 6 months. This allows you to monitor interest rates, and not miss out should they move upward.

As for the investment club. If you have people who you know and can trust, they are committed as you are, they will agree to set aside whatever amount you as a group say you will, you all have pretty much the same investment risk mentality (this does not mean you all have to be the same), and agree this is a long term commitment, then by all means form a club. The major advantage of a club is that you can diversify faster, as your funds accumulate faster than if you do it alone. Still, sometimes it is better to do it alone.

In regard to the story you told, here's my hunch. If this person has never had any kind of significant wealth before, they will blow it and be penniless within 18 months. If they are smart, they will not rush out and just buy things because they can. They will soon get themselves over their heads in debt, and the monies will not stretch that far. I would invest 80% of what the balance is after taxes have been paid, and only spend 10%. I would give 10% to the church. That's just me. I would diversify the 80% I did invest between a money market account, a 6 month CD, some select mutual funds (growth and income, growth, and international), and would find me a good trader that has a proven record of investing in currencies or oil. Might consider some other commodities, but I want to see the track record first. Any good trader will provide this, and if they don't they aren't good. This notion that the really good traders that generate 3% per day, etc. have to remain anonymous is ludicrous. They only get clients by touting their trading record. After all, they are in it to make money and they can't if they don't have clients. Of course you will always hear about these so-called traders in cyber-world, but funny how they never appear in the real world. Check your financial papers or financial websites, and you will see them advertising all over the place. You have probably even received information from them in your post/mail for the yanks.

Hope that all made sense, but please ask if you need anything clarified or explained further.

**YogiBrood** · 25-02-2008, 07:13 PM

What a day it was, woke up pretty late, and why not and after completing a modest brunch at 12:45, saw the sweet sunshine outside and the trees ain't swaying... must be a good sign so off we went to pay a visit to the nearby "Kinderdijk Windmills" for a stroll and hopefully, a good chilled beer by Rotterdam!

My dog luv it but I missed mine as the brown cafe is still closed for the winter...

click>> Windmills of Money ....taken on this afternoon stroll with my dog.

I cherished the thought during the stroll... precisely what you mentioned as I just read here upon my return, what a coincidence... u're not watching from up there R U Lynn??

In 2005, suspecting that loss to be inevitable from You Know Where and with whom???.... I was in Singapore and the Bank (Investment Dept) Manager told me, you got to try this, pretty safe and its the right time to put lots, and LOTS if you can spare the sum... its going to be a BIG return in over a year!!! I know this bank of mine ain't fibbing when its down to money biznuz... but I had just about enuf with money spent on so-called Investments the easy way...
Anyway, I gave in since she's such a sweet & charming lady (I have a spot too soft with women, I must confess...

)

After 18-months lapse and still my miserable capital continues to compound unabated and I completely forgotten about it, honest, I TOTALLY forgot it existed!!! Paying an impromptu visit to the Bank with my wife, to sort other more interesting aspects, the Manager asked me if I remembered that recommendation and whether I want to stop or let it continue...

I was amazed and my wife asked, lets see what came out of it before I shall decide...
Whoaaahhh!!! my invested initial of $2000 has now accumulated a net interest of just over $4300 in that 18 months!!! Darn my halo on this!!!

With a dry grin and murmur, I decided to let it continue, since I wasn't needing it and it has since been growing, incredibly with the Schroeder Investment Plan. Well, I wished I had placed 20K if I wasn't so knocked over with that other loss, I wasn't taking anymore chances since... but with this recovery signaling from a reliable source, the Bank itself, we opened two others with a far greater confidence this time round and it'll be a good one for sure... its getting better with the Asian markets!!!

If anyone expects to become millionaires from several thousand bucks in under a ridiculously short time, one needs a sane shrink to help you... let alone those that believe with under 50 bucks, heaven's vast universal pension payouts will fall on those selected chosen few... thanks to those messiahs of money making cheats who are solely bent on borrowed time and esp. with your naive faith in them.

It may take a weebit longer but place it with your safer financial source, like a Bank that manages well on your behalf and delivering sound interests!!!

Just stay away from this one exception... the Zimbabwe Bank!!!

taken on Febr 25th, 2008

**LynnRE** · 25-02-2008, 08:29 PM

In my initial post I mentioned the power of compounding. While many of us know it in a negative way (can anyone say credit card debt), we never stop to think of how it works for us in a positive way. Like everything, it takes TIME (there's that word again) for it to work for us, but work for us it does. Here's an illustration that I think might help you, as well as make you want to have it working for you.

A person comes a long and offers for you to work for him for one month. He will give you two choices of compensation. The first he will pay you a flat fee of $250,000 for one's month work; or you can choose to work for a penny the first day and he will double it every day thereafter for the entire month. In this case we will use a 30 day month. So we stop and think and we can pretty well calculate in our head the doubling of a penny up through the first 10 days, and we immediately say we will take the $250,000. Now the truth is, 99 out of 100 will take the $250,000. We will not take the time to calculate out just what doubling a penny every day for 30 days will actually mean. Of course if you took the offer of doubling the penny, you would greatly exceed $250,000 at the end of the month. Don't believe me do you. Well, here it is broken down for you to see for yourself: Day 1: 0.01; Day 2: 0.02; Day 3: 0.04; Day 4: 0.08; Day 5: 0.16; Day 6: 0.32; Day 7: 0.64; Day 8: $1.28; Day 9: $2.56; Day 10: $5.12; Day 11: $10.24; Day 12: $20.48; Day 13: $40.96; Day 14: $82.92; Day 15: $163.84; Not looking too good is it? Here we are 1/2 way through the month and we have only earned $163.84 for a day's work, compared to $8,333.33 if we had taken the $250,000 payment. But let's continue to see what happens: Day 16: $327.68; Day 17: $655.36; Day 18: $1,310.72; Day 19: $2,621.44; Day 20: $5,242.88; Day 21: $10,485.76 (ah compounding is starting to take effect. We have now exceeded our initial $8,333.33 for the flat amount daily) Now watch what happens from day 22 to day 30: Day 22: $20,971.52; Day 23: $41,943.04; Day 24: $83,886.08; Day 25: $167,772.16; Day 26: $335,554.32; Day 27: $671,088.64; Day 28: $1,342,177.20; Day 29: $2,684,354.40; and Day 30: $5,368,708.80.

Just as Yogi demonstrated above, the longer you let the interest compound, the more you will earn. It is the constant input of money, without taking it out, and letting it grow over time that will generate significant returns. While I reduced the effect to a 30 day period of time, change that to over a 30 year period of time and the results will be even greater than I have demonstrated here.

Now contrast that with credit card debt. If you have a credit card balance of $10,000 and all you do is pay the monthly minimum payment (you cannot add any spending on the card) it will take you 14 years to pay it off. You will have paid them over 20 times the intial $10,000 of charges in interest charges. In short, they got rich, you got poorer. By the way to pay it off in 7 years, you would have to pay an average of $150.00 more than your minimum payment. That's how compounding works against you. Why not reverse the tide and start getting your hard earned money working for you, instead of against you?

**LynnRE** · 26-02-2008, 01:53 AM

Originally Posted by YogiBrood