I Wanna Be, Forever Young!

Think about the first time you received advice from a friend on buying a stock. Was it a stock you had heard of before? Often, these friends have hot information about an up-and-coming technology stock that’s sure to boom. Easy money! 

Remember when you took the SATs and you were asked the deceptively simple question, “If you have $100 and receive a 10-percent return for the next two years, how much money will you have at that time?” Of course, the answer chosen most often is $120. It makes perfect sense, right? But then you get home and realize finger-counting is not always the best way to solve math equations! This SAT question is a perfect example of the power of compounding interest (by the way, the answer is $121). 

The great philosopher Chris Rock once said, “Nothing shouts ‘temporarily rich’ more than a house full of plasma televisions and a garage full of luxury cars. Ask Rick James or MC Hammer if I’m lying about the danger of living paycheck to paycheck”. So what’s Chris Rock really trying to say? I think it’s a combination of things. Let’s stop spending all of our money on assets which depreciate over time, and maybe we shouldn’t live every day like it’s our last (financially speaking) and actually start preparing for our financial futures.