by Helmi Hakim | Apr 25, 2013 | Investment
Today, I am going to share with you what most finance courses out there, dont teach you.
The Mechanics Behind The Formula Of Compound Interest! 🙂
In one of my previous blog post, I have shared on how to calculate compound interest, without using a financial calculator.
This is the formula again.
Principal (1+interest)number of years
In this blog post, I am going to share with you the mechanics behind the formula of compound interest for a single cashflow. Before that, let me give you an example, on how compound interest works.
Example, you have $10,000 today, and you earn 9% compounded interest, annually.
For the first year, you earn 9% X $10,000 = $900 interest
On the second year, you will earn an additional 9% X ($10,000 +$900) = $981 interest
You earn interest, not just on the principal…but you earn interest on the (principal + interest)
So total in 2 years, you make, $10,000 X (1.09) X (1.09) = $11,881
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The above explanation is pretty straight forward and it is pretty easy to calculate if we compound it for 2 or 3 years.
If we compound for 2 years, we take 10,000 X (1.09) X (1.09).
If we compound for 3 years, we take 10,000 X (1.09) X (1.09) X (1.09).
If we compound for 4 years, we take 10,000 X (1.09) X (1.09) X (1.09) X (1.09).
BUT what if we compound for 60 years? What are we going to do, if we dont have a financial calculator? Take….
10,000 X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) ???
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The mathematician who developed this formula makes it easy for us.. Just use this formula…
Principal (1+interest)number of years
Example if you have $10,000 and compounding it for 2 years at 9%/annum.
The formula goes 10,000 (1+0.09)2
which is also 10,000 X (1.09) X (1.09).
For the first year, you make (10,000 X 1.09) = $10,900 inclusive of interest, and the second year, you make (10,900 X 1.09) = $11,881
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But if the $10,000 is compounded for 60 years, instead of inputting, 10,000 X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09) X (1.09),
just use this simple but powerful formula.
10,000 (1+0.09)60
Hope this explanation is beneficial for you…. 🙂
by Helmi Hakim | Dec 9, 2011 | Investment, Miscellaneous, Motivation
Few days back, I received a whatsapp message from my girlfriend.
She was talking about buying a beautiful eyeshadow, which was on sale at Tampines Point.
As she knew that I am a prudent and careful buyer, also a voracious saver, she asked me for help……. She asked me to motivate her, not to succumb to the temptation of forking out HUGE dollars from her wallet, to buy the beautiful eyeshadow……..shehasmanyofit
Did I succeed to convince her? The answer is a miserable, NO! 🙁
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Today, I am going to share with you, simple yet pragmatic strategies on how, I curb myself from squandering and spending all my money on things that, I may not need.
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Strategy No 1: Stop before you buy
The first strategy to curb yourself from spending is to procrastinate in buying…
Keep telling yourself, that you are going to buy the stuffs that you are looking at, the next following day.
I assure you that you will soon forget about it. 🙂
Tell yourself, “Do I really need this?”
How many hours, must I work to get back this money? How much is it worth, if i invest it @10%/annum in 10 years, 20 years, 30 years?
Strategy No 2: Pay yourself first
When you get your income, pay your personal savings plan first. You can instruct bank to do an automatic deduction to your personal savings plan. You can get endowment plans, or invest in funds, stocks or commodities like gold…
By setting aside that money for savings seperately, you will reduce the tendency to spend all that you have at once… 🙂
Strategy No 3: Destroy all credit cards except one. and pay full balance on time
Have you ever wonder, why the banks keep offering you attractive freebies, reward points and rebates if you sign up for their credit cards?
It is because, they know, when you have a credit card, you will tend to spend MORE when you have access to this easy credit…. They want you, to owe them money and pay interest…
My recommendation for you, is that, only keep one credit card for use, and pay the full balance on time….
That’s it!!! I hope, the 3 strategies, that I share with you, will be of much help for you to curb yourselves from spending over your limits…. 🙂
by Helmi Hakim | Nov 15, 2011 | Investment
Example, you are an investor. You invest your $10,000 in a financial instrument, giving you 9% interest, compounded on annual basis for 10 years. How much will you get, at the end of the 10 years?
If you are a financial planner, like me, you will definitely reach out your financial calculator and punch in these figures, to get the answers. idoiteveryday
Set: End
n: 10
i%: 9
PV: -10,000
FV: Solve
…..and in an instance, you will get $23,673.63
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In my “financial planning for wealth manager” (catered for high networth individual) class, I learnt to calculate the answers, without using a financial calculator. You can use a normal, scientific calculator to get the answers.
How do you do that?
You can calculate it this way…..Use this formula….. Principal (1+interest)number of years
Just take 10,000 (1+0.09)10 = $23,673.63
Easy right?
For now, just remember this formula. In the next blog post, I will share with you the intricate mechanics of this formula. Share this blog post, if you find it useful! 🙂
by Helmi Hakim | Jan 1, 2011 | Motivation
You know, one thing about, being self employed, is that you must have the DISCIPLINE to wake up early and work.
When you lack the discipline and no one is monitoring you, you may go off tangent from the goals that you have set.
So, one thing that, I do, everyday, is to set daily goals, daily accomplishment…things, that I must complete, just for that day…
Example for today,
Things To Be Accomplished
1) Call all my Malay teammates, for support to book roadshows for year 2011
2) Prepare schedule activities for year 2011
3) XXX
4) XXX
Then strike off, till all is done…So that’s it, in my short post.
If you want to accomplish more on a daily basis, learn to Set Daily Goals guyz!!! 🙂 🙂 🙂
by Helmi Hakim | Nov 1, 2009 | Miscellaneous, Motivation
I am now working extremely hard, converting my cases and meeting more people these days all because I am fighting my way to get a seat, for Beijing 2010.
(Take a moment and pray for my goal)
………..
Okay…In this post, I am going to share with you a secret that I stumbled upon a book, I am currently reading, called “Outliers”…
The author, Malcolm Gladwell conducted his own research on why some people just happened to succeed in their daily pursuit.
He research on Bill Gates, on Steve Jobs, on the famous Beatles…..on many successful people….
Why are these people so…successful? ….so good in what they are doing?
Why do Jews make up such good lawyers?
Is this something in born in them or….there’s a secret to it?
These questions seems intriguing to me for the fact, since young I am always impressed that why some people are just more intelligent than me.
Why do some people seems to know so much and rather competent in it…?
Do they have better brain or WHAT?
Are you ready to hear the “secret” to BECOME A MASTER IN ANYTHING YOU DREAM OF?
The answer is 10,000 hours.
Yes…It is simple but profound….You have to practice 10,000 hours.
You can only be a master in ANYTHING if you have devoted your blood, sweat, tears and time for 10,000 hours. Period.
Some people are just plain lucky, because the days when they are young, their environment preconditioned them to attain that 10,000 hours of training, and that is why they become so successful, so GOOD IN WHAT THEY ARE DOING!
If you are not that privilege to have such an environment, YOU CAN CREATE ONE! I aim to be a master of financial planning. Master of running a successful business.
I have been in this business for over 2 years. I work 6 days a week, but a matter of fact, I do think about my business everyday. From the moment, my eyes blinked in the morning, till the night when I sleep.
I eat, breath and sleep my business every day. Put there, I think about my business 12 hours a day. In one year, there is about 360 days. In one year, I clocked 4320 hours. In 2 years, I clocked 8640 hours.
I dont mind working hard, to be a master in something, I am deeply passionate about…..So, if you are passionate in something, and will like to be a master in it….
MY recommendation: Devote 10,000 hours in your field as fast as possible, and you will soon realise that you are going to be one of THE BEST IN YOUR FIELD!! 🙂
