Dave Ramsey, a world renowned financial analyst, best describes the power of a mutual fund and compound interest. Ramsey proposes that saving simply a few thousand dollars a month can make you a millionaire by the time you are in your 60’s.
Diversify
Without a large investment, it truly is hard to get your money in enough companies to be diversified. Being diversified gives you saftey and almost ensures that you are going to get your money back because history shows that the stock market is growing nearly 15% a year.
History Shows Growth
History shows a few things that gives mutual funds a great advantage rather than investing your money in CD’s or other type of investment. In 10 year periods, 100% of the time, the stock market earns money. In 5 year periods, 98% of the time, the stock market earns money. Having your money all over the board in that stock market almost guarantees growth if history continues.
Professional Portfolio Manager
With billions of dollars invested into mutual funds, companies want to ensure that the money is being handled well. Because of this, they hire professional portfolio managers that diversify your investment and ensure that you are tying into the right companies. To diversify the cash as best possible, the portfolio manager usually invests in hundreds, if not thousands of companies.
No Hassle on You
Being as that most individuals who are new to the stock market do, you most likely will make some bad decisions if you are in this game alone without a broker. With a mutual fund, which has a professional portfolio manager, you don’t have to worry about doing a dime of trading. All of this is handled by your portfolio manager.
In conclusion, Dave Ramsey provides a powerful tool that shows the power of compound interest. The link below is to a calculator in which it shows you how much you can earn with compound interest. I personally did a calculation.
- Starting Balance : $2000
- Annual Rate of Return : 10%
- $2000/ year
- $2000/year for 10 years
- TOTAL IN 30 YEARS: Over 3 million dollars
Calculator: Click Here
No Comment Received
Sorry the comment area are closed for non registered users