Author Topic: deleted  (Read 7339 times)

henders

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« on: December 07, 2013, 12:39:19 PM »
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« Last Edit: June 26, 2017, 09:39:57 PM by henders »

Lans Holman

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Re: Multiply by 173 rule
« Reply #1 on: December 07, 2013, 12:45:42 PM »
It's a guideline for estimating how much you would save by dropping a particular expense.  Say you spend $20 at the bar every week.  Now suppose you stop doing that and instead invest all that money.  At the end of 10 years you would have about $15,000 (20 * 750) that otherwise would have been spent.  It shows how powerful a simple change can be combined with the power of compound interest.

Acadian

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Re: Multiply by 173 rule
« Reply #2 on: December 07, 2013, 12:53:13 PM »
I agree with Lans Holman. It's gives you the amount of money you would have if you took that same weekly expense and invested it consistently for 10 years at a return of approximately 7%.

iamlindoro

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Re: Multiply by 173 rule
« Reply #3 on: December 07, 2013, 12:53:40 PM »
I believe the result of the multiplication is meant to demonstrate both the actual costs, and the opportunity costs assuming you had instead invested that money with an 8% annual return (the total US stock market tends to return 8-11% averaged out over the entire history of the stock market).

http://investor.gov/tools/calculators/compound-interest-calculator

You can go to the above calcualtor, input $4000 a month, 10 years, 8% return, and you get  ~$695K.

 

Wow, a phone plan for fifteen bucks!