Financial education for children - Do your children know the incredible power of compound interest?

09-03-2018 mainjack
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Independent of the level of income a person to achieve in his life, has been statistically shown that less than 20% reach retirement without having to lower your standard of living.

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Something has to be wrong. Something has to be lacking in the education of a human being if he is not able to prepare financially for their old age after a lifetime of work.

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And it's not because they never had enough money to invest and prevent. It is a myth that money is required to make money. What is needed is to know how to multiply. And it does not require large entrepreneurial skills to achieve this. It just requires discipline, patience and rigor.

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Albert Einstein said that the greatest invention of man is compound interest.

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What is compound interest?

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It is called the process of accumulating capital interest it produces, so that the interests yielding interest turn. It allows accumulate great wealth from small amounts of money invested for a long period.

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This is how a young person of 20 years can reach several million dollars at age 60 if he is diligent in investing about US $ 80 a month or $ 20 per week to 10%.

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A capital of 1,200,000 pesos after five years, and an annual compound interest rate of 8% becomes 1,763,194 pesos.

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Another very good example of the power of compound interest is reflected in a pension reform that is about to be implemented in Chile: On July 1 each mother will receive $ 297,000 per live birth, a figure which will apply an annual return estimated 5.5%.

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According to official estimates, a woman of 35 years with three children will receive $ 4.4 million at age 65, the age at which you can withdraw funds.

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It is simply to invest the money so that it can multiply rather than spend it.

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And therein lies the problem: we like to spend! To the extent that we spend what we have. Most people live so indebted that have compound interest working against them - in favor of banks and financial institutions.

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And the biggest problem is still that they are teaching their children! Live a lifestyle beyond our means and spend just one month to another is a bad example for them.

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Why not make a change today? Why not restricted, plan a budget with them, stick to it and explain that the savings to invest is more important this month that the shoes or the new mouse to the computer?

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You should be able to save at least 10% of their monthly income.

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Teach your children to be good temporarily restricted in order to succeed.

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Show them with these numbers, black on white, as you can multiply the money instead of spending it just live until nothing is left.

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At first it's going to bother you, especially if you have been very regalones, but when they grow up they will thank you. They will have learned the valuable lesson of saving and how a more austere life style today will ultimately lead to wealth in the future.

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If you need help with the financial education of their children, I invite you to where you will receive a free virtual book that will teach you 10 facts that you can teach your children about how to develop their entrepreneurial skills and have their own businesses. Bettina Langerfeldt, whose passion is to teach people of all ages how to acquire a vision for your life, like setting goals and then pursue specific education so that they can achieve