The power of compound
interest (ignoring taxes, such as in an IRA or a life insurance policy, or
something like that). is enormous.
That's not really news, but what was news to me is this government page where you
can make an easy calculations on "what it".
This website came to me by way of a
curious moment today – I found some documents cleaning my files, and realized
that I had an opportunity in 1983, when my children were young, to purchase a
Gift Trust Fund that was being offered by American Century (under a prior name
20th, Century Funds). The idea was this Fund would act like a mini
trust fund, but the Fund company would do all the paperwork for you, and file
any and all tax returns. The minimum
investment was $2,500, and you locked up the money for a minimum of 18
years. Ideal as a gift for a newborn child for
future college money.
The fund has earned 11.5 % average
per year, since inception. So, had I put
in $2,500 per child, what would the present value be? I ran the numbers, it was something like $65,000. Think if I had put in more, like $10,000
? I ran the numbers on putting in
$40,000, and that would have yielded $1,000,000. Of course $40,000 is no small amount to part
with, but $1.0 million isn’t a bad payout.
This Fund tracks the market, but invests in all size companies with high
growth since it takes a long term perspective, that makes sense.
Of course the on-line calculator is my thrust
with this post, not the Fund. But it is
interesting to look back over time and see that some growth mutual funds do
perform well, in spite of 2008 type crashes. And surely this Fund is not the most successful of the type.
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