Earning More By Saving Right - Michael D. May

By Author: Michael May
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Earning more by saving right - Michael D. May

Glowpay.com is a fixed income investment service provider that provides a

fixed income investing rate along with other financial services. In this article

we are assuming that you are the type of person who wants to make a little extra

money on your savings and you have found Glowpay.com fixed income investing

services at Glowpay Financial.

There are basically two ways you achieve your goals in fixed income

investing. First, let us assume you have a certain amount of money that you want to

deposit and you would like to see where that money will be in 5 or 10 years if you

just let it sit there and accumulate interest. For all intents and purposes

we will call our fixed rate fee here \\\\\\"interest\\\\\\". So you know Glowpay.com will pay

you 6% annual interest. Lets calculate how much that will be in 5 years and see

also how much that will be in 10 years.

Case 1 Five Year Investment

...
... Lets first figure out what the formula is for the future value of money.

Your money, for example, will say is $1000. You have $1000 to start with and you

would like to deposit that money in Glowpay and make 6% a year on your

investment. The periods will be 5 periods, 1 period per year. So we have an

equation that looks something like this:

Future Value = $1000 X 1.065

So we want to know the future value. We know you have $1000 and we know that

Glowpay.com pays 6% interest per year and since you want the premium (the money

you invested in the first place back) then we have (1.06). 1 being the premium,

and .06 being the interest rate. On that we have the 5 which

represents the number of periods, in this case, years, that you want to keep you

money with Glowpay.com.

So if we calculate the future value we get a rounded number of $1338 at the

end of 5 years.

Case 2 Ten Year Investment

So basically if want to figure out a ten year investment with Glowpay.com

then we can do the following change to the equation we looked at in case 1 to

work out how much money you will have after ten years.

Future Value = $1000 X 1.0610

You now have $1,791 dollars! Isnt that great?

Case 3 You Have a Target in Mind

So this next case is not figuring out the future value, but figuring out what

we call, present value. In this case, you know that in 5 years you want to have

a certain amount of money. Lets say you want to have $1000 in 5 years. Your

question is, \\\\\\"How much do I need to put in today to get $1000 in 5 years?\\\\\\". This

equation is very similar to case 1s future value equation.

We know the future value already. We know in the future we want $1000 so we

have this:

$1000 = Present Value X 1.065

And we will change that around a little to get this:

Present Value = $1000/1.065

Which gives us the value that we need to invest today which is $747.00 to get

$1000 in 5 years.

Case 4 What can I do with this information?

So in case 4 I am going to give you an example with someone who is retiring

soon. Lets say that you are retiring soon. Lets say that you are working

towards the end of your career and you have been saving money in a savings

account which pays you 3% a year. Ok, not bad. But lets say you are wondering

on the difference of return for the money you are earning from interest and the

interest that Glowpay.com is paying and you would like to see what that would

look like in five years, which is when you are retiring. Lets say you have in

your retirement savings $250,000.

Glowpay = Future Value = $250,000 X 1.065 = $334,556

Bank = Future Value = $250,000 X 1.035 = $289,819

You see that? There is a $44,737 difference there. I do not know about you,

but $44,737 could be quite important.

Case 6 What can I do with this information?

The next case is starting more at the beginning than the end. Lets say, you

have a child. Right now your child is 2 years old and you want to put some money

aside to make sure your child can pay for a good university. Lets say you have

a goal of reaching $60,000 for the university. The question you would have

basically is how much would I have to put aside today to help my child pay for

university by giving him or her $60,000 for tuition. Lets say there are 20

periods and your target is $60,000. We will figure out the present value of

$60,000 today.

Present Value = $60,000/1.0620

With that, we know that you need to put in $18,708 today and your childs

education is paid for.

Some Final Points

Now of course, we understand that your goals may not be those mentioned

above. Maybe you have shorter term goals, maybe you have a goal of a new car, or

a just want to earn some additional money on your savings or want to earn enough

money a year to live off of. Regardless of what your goals are, Glowpay.com

is here to help.