Home
  Money
  Real Estate
  Immigration
  Biz
  Lifestyle
  People
  Literature
  Glossary
  Job Search
  Who we are
---------------

links

Spanish Version

 


The Investor
 

 Search:
 
 for
   

 

 

 

 

Home

FAQ

Subscribe

ITI Calulators

Literature

Glossary

Read why:
- Some investors like Warren Buffet become rich whereas others don't succeed
- Banks and brokerage firms make money
- In investing it doesn't matter from where you start, but which way you go

 ...and, last but not least:
- How you can become wealthy by following the basic principles of investing

Basically, it's all about the effect of compound interest. It says that whereas some numbers can grow in an arithmetic progression (like 2,4,6,8,10,12,14...), others numbers grow exponentially (like 2,4,8,16,32,64,128...) like in Moore's Law. We'll explain this concept deeper at the bottom of this page.

The stock market as a whole, like the Dow Jones or the S&P 500, has grown historically around 10-13% annually since the 20's, 50's or 80's. Let's say you invested only $2,000 annually and started at age 25. How much is your worth when retiring at age 65? Take this, you'd be worth $1,111,481. You'd be a millionaire, even when calculating with only 10% interest. What if you'd add more than $2,000 a year at some point in your life? Please make this calculation with the ITI Investment Calculator to find out for yourself.

Now let's come back to Warren Buffet. He is the second richest man on this planet and the most known investor. How much did he make a year? 70%, 80% or more? No, he made 22% annually on average. You can easily find this and any other information we publish here on the Internet and in books, if you don't believe that.

Now, let's look at banks. What business are they in? The answer is: They buy and sell money. They buy it around 2% and sell it around 9%. So they gross in around 7% on their money (actually your money). No, wait, additionally they invest your money and can make another 10%. What do you think a bank will tell you? You can guess: "Put your money in a savings account."

So, let's step ahead. How do brokerage firms make money? Since 1933, brokerage firms and banks have to be separate entities by law. In other countries besides the USA, where this is not the case, the quantity of people investing in stocks is much lower as in the US. Guess, why financial institutions there tell people they should put their money in savings accounts. In the US, where brokerage firms have a lot of power, they tell people to invest their money in stocks. This situation is by far superior to other countries. That's the reason (amongst others), why the US is the dominant power in the world. Businesses have enough money, thanks to the stock market, to work efficiently. But how do brokerage firms make money? Well, first of all by fees. Stock brokers will tell you to "sell one stock and exchange it for another" to generate brokerage fees. Enough has been written about analyst, which work for brokerage firms, so we don't want to add more gas to the fire. We want to come back to what's important for you: How can you make money and achieve a good return? Well, be independent, at least in part, invest some money with brokerage firms, but take some money apart and make your own decisions. We'll help you in choosing stocks, which are not fashionable with brokerage firms, but do offer a high return.

If you have studied the ITI Investment Calculator, and we strongly recommend to do so, you have already discovered that you can make big bucks in achieving a great return as a percentage of money invested. As well, you can easily verify with this calculator, that it is not important to start with a lot of money, what is really important is the effect of compound interest and achieving a high percentage of at least part of your money invested. So, now let's get a little bit deeper into this magic effect of compound interests.

Maybe you have already learned through the ITI Investment Calculator, that the double rate of interest doesn't mean that you'll achieve the double return of your money over time. Yes, 20% interest means that you'll have double return than having 10% interest, but, only after one year. 20% interest means having double interest over the first year, but, as well, over the second year, which is 44% by then. A quick example: Say, you invest $1,000. With 10%, you'll have $1,100 after the first year and $1,210 after 2 years. With 20%, you'll get $1,200 after the first year and $1,440 after 2 years. See, where the 44% come from? If you do this calculation for 10 years, you receive $2,540 with 10% and, what a wonderful effect, $6,192 with 20% with the same amount invested. After 30 years, you can have $237,376 with 20%, instead of $17,449 with a 10% return. So, wouldn't it be great to have some money invested with a high(er) return?

In Stockletter.tv we email you instantly, when there is another great buying opportunity. We inform you at what price to buy and then again, when and at what price to sell. Additionally, you can use the ITI Compound Interest Calculator to decide when if this is the right moment for you to sell to maximize your annualized return.

That's what we are doing. You can use our calculators to see you how to achieve a higher annualized return by buying and selling wisely. We recommend stocks, which are depressed by 20%, 30% or even higher. They are momentarily out of fashion, but are poised to pull back soon, easily giving you a return of 20% or 30% within months. This let's you appreciate the effect of compound interest.

Ignore this at your own risk, don't only count the money you are receiving, but the money you are not receiving on your investments and which you should merit to receive. Your today's money is worth a lot, compounded to the future. Much more than you'd probably be receiving if you proceeded the way you're investing at present.

Please read the FAQ for more details.

 

 

Contact us - Privacy Policy

Copyright 2001-2008 TheInvestor.tv
by IdeasToImprove