The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1923-01-10
THE POWER OF INTEREST

The following two articles are reprinted from
recent issue of The American Magazine, by
request from reader of The Gazette.
7 YAVE you family fortune? Probably not.
n Then why not go ahead and build one !?
1 There is nothing fascinating in the
world than creating a family estate, whether it
be $4,000, $4,000, $4,000, or $4,000. If most
people really knew how easy it is, they'd all be
doing it. / have known many persons who, in
the years they were waiting for old Aunt Susan
to pass away, or old Uncle Jim to make will,
could have laid foundation of fortune of their
own and not have overexerted themselves financi-
ally, at that!
eff everyone would take pencil and do some
figuring in his earlier years, he would find that it
is not necessary to strike streak of luck to
make ones self comfortably well off.
Suppose you want $4,000. That's going
to be the family fortune that you're to leave to
your children. Suppose you thirty, and
you want that estate to be ready for your chill
dren when you are seventy years DID, If asked
most of my readers to guess how much money
they would have to lay away each year to get
together that $4,000, could hear guesses all the
way from 5000 to $3.50 year.
"But the fact about the matter is that it
will take only trife more than S. month"; less
than twenty cents day, to build up that estate
of $4,000. The actual payment required is $64-
81 year, which, invested at per cent compound
interest, will amount to the $4,000 in the for
tieth year. If you are young man woman
twenty years of age, and want that $4,000 at
about seventy, you will have to make your pay
ments only $34.46 year. Perhaps some father
will be willing to start his boy off on this plan.
these figures almost unbelievable
Under that ffty-year plan you yourself save less
than one fifth of the money. The balance, or
more than four ffths, comes from the interest.
"Most people have heard in vague sort of
way of what compound interest will accomplish
but very few have tried to apply the rule
If you want to know the number of years it takes
money to double at compound interest, divide the
rate of interest into ", and that will give the
number of years, or vice versa. At 6 per cent
money will double in twelve years, at per cent
in a little over ten years, and so on.
"By using our knowledge of how money
doubles at compound interest, it is comparative
ly easy for anyone to figure out many systems of
getting together that $4,000: Suppose you are
thirty years old and have 81, $50 ready for the
fund All right, start it off at 6 per cent COM
pound interest, and reinvest the interest money
each year. When you are forty-two it will have
grown to $4,000, when you are ffty-four. to $5,-
600, and when you are sxty-six to more than
$4,000 That was so easy we hardly knew where
the $4,000 came from.
"If one is willing to spread such savings
plan over long period of years, the value of
compound interest becomes most apparent The
first few years it works rather slowly and that
is why most of US never find out what we might
have accomplished.
In fact, the plan of accommodating $4,000
by saving $64.62 year for forty years might be
accomplished by most people without crimping
their usual expenses at all. 1t could simply be
taken on in addition to what we usually save
The important thing is to begin early"
@OMPOUND interest is going to pay my wife
I and me a monthly income of about sos
when we reach fifty years of age through
plan we worked out shortly after our marriage