Category: Truth Tips

How do I figure out if I can get ahead by earning 6% if I have an 8% cost?

How do I figure out if I can get ahead by earning 6% if I have an 8% loan? At first glance, the answer is obvious, you don’t get ahead.  However, sometimes we get confused and think that since an account (say at 6%) has an increasing balance while a loan (say at 8%) has a decreasing balance, we might be able to get ahead.  Let’s look at it to see the whole truth of the matter. Take a $100,000 account earning 6% over 20 years.  Future Value: $320,714.  

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Truth Tip All Calculators

Financial calculators: switch from annual to monthly mode or any other mode and it will ask you if you want to adjust the existing amounts to match.    Pushing the “TOP” button: causes the calculator to stay on top of anything you are doing.  Double clicking on any of the labels for the inputs in the calculator brings up that (other) financial calculator.

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