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Simple Online Financial Tools

by admin on August 18th, 2012

Life Coaches tell their clients who desire successful living to tell themselves the truth. The internet offers useful tools to help us take a realistic look at our finances.

Melissa Mains Timberlake, a coach in Chicago, says she’s “ Choosing to look truthfully at who I am, the choices I’ve made and who I’m becoming. Lately, I’ve been courageously considering those area of my life where I feel a sense of uneasiness. Such a gift to accept the truth, embrace my errors calmly and then address them diligently. Dropping the denial games…”

I love this next statement best: “… releasing the self-critism, and recognizing that the best way to continue to improve today and tomorrow is to know where I’ve gone wrong. Accept it. Learn from it. Change it.” Everyone makes mistakes; everyone has set backs. Learn and move on.

One easy tool that give us a picture of where our finances are headed is a Compound Interest Calculator. In just a few minutes you can get a general idea of the outcome of your savings plan.

Take, for example, a 40 year-old who already has $100,000 accumulated. Let’s see what happens if you continue saving $500 per month at a hypothetical 6.5% for 25 years. That would take our imaginary saver to age 65, a point where a lot of people are hoping to work less and play more.

There are investment vehicles, like annuities, that claim to pay 8%. Annuities have built in expenses, which may yield only 6.5% after these extra fees. Bank CDs only yield around 1% at the time of this publication.

So, using very optimistic yields, tells us, if we start with $100,000, add $500 per month and get 6.5% for 25 years we’ll accumulate less than $860,000.

The bad news is Forbes Magazine reports “Just a generation ago, a person with $2 million or more in liquid assets would have had enough for a secure retirement. But not today.”

The beauty of these free online calculators is how easy you can vary the assumptions. Most people haven’t saved $100,000 by age 40. Let’s see what happens if our little saver accumulated $50,000 and increases their monthly contribution to $1000 per month, still netting 6.5% annual return. That turns into slightly less than $994,000 in 25 years.

Unfortunately there is more bad news. Inflation compounds too. Inflation is currently more than 10% when we add the cost of food and fuel back in to the equation. At 10%, inflation cuts your buying power in half every seven years.

My high school English teacher, Gary Masquelier, thought chewing gum in class was an insidious evil that needed to be thwarted with diligence and intention. Former Federal Reserve Board Chairman Alan Greenspan was more concerned with inflation because it is a silent thief. Oppenheimer funds has a helpful write up that explains diminished buying power due to inflation: 

Most people can’t save much more than they already do, at least without drastic sacrifice. The one solution is to earn a higher rate of return. We have a 21 year old student who spoke at a luncheon yesterday who said he made more than 100% in just six months using our market forecasting techniques and the trade suggestions in our newsletter.

Our 21 year old student is quite bright and has an advantage over most people, but what if you could make 50% per year? We take risks, so be conservative: invest only $2000.  You’d have $6,650,000, in only 20 years. You could drive your new Audi R8 to your high school reunion and set on fire a half million dollars, just to tick off your friends, and still be a multi-millionaire!

Connect with Ms. Timberlake at

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