The JSE and finance forum for South Africa
General Category => The Investor Challenge => Topic started by: Patrick on June 30, 2015, 07:45:13 am
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http://investorchallenge.co.za/the-doctor-and-the-model/
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Great post - lots of time/ little money vs lots of money/little time. One up for us middle age folks :TU:
People also need to understand there is a MASSIVE difference between saving and investing - most confuse the two. I was always an excellent saver, if I had just invested half of what I saved I would be have had quite a bit more now.
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Nice, very nice. :TU:
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Thanks very much for this story. I may just use it as a Toastmasters speech. It's really awesome illustration of the power of compound interest.
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Thanks Patrick for an insightful article. I did a similar exercise (I'm not very good with working out interest in Excel) and played around with the figures a bit. What I find is that the difference is way different if the interest rate is changed. The doctor will have more money than the model if the interest rate is 9 or below if my calcs are right. Can you apply this to your example and confirm if my calcs are right.
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Great post - lots of time/ little money vs lots of money/little time. One up for us middle age folks :TU:
People also need to understand there is a MASSIVE difference between saving and investing - most confuse the two. I was always an excellent saver, if I had just invested half of what I saved I would be have had quite a bit more now.
Same here, spent 4 years saving and not investing, then another 5 investing badly in property. I could kick myself as I should have been WAY past my FI goal by now :(
Thanks very much for this story. I may just use it as a Toastmasters speech. It's really awesome illustration of the power of compound interest.
Excellent, I'd love to hear how the people listening take it.
Thanks Patrick for an insightful article. I did a similar exercise (I'm not very good with working out interest in Excel) and played around with the figures a bit. What I find is that the difference is way different if the interest rate is changed. The doctor will have more money than the model if the interest rate is 9 or below if my calcs are right. Can you apply this to your example and confirm if my calcs are right.
Your calculations are right, the lower the interest rate, the greater the effect of continuing contributions. Wouldn't make a great example of compound interest though, so I'll stick with the 12% example! Just FYI, to be safe rather be a model and THEN a model manager :)
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The roles of the "model" and the "doctor" are irrelevant to explaining compound interest. I would have preferred if you used two siblings having the same career.
You have ignored the higher earning potential of the doctor and the implied higher savings rate.
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The roles of the "model" and the "doctor" are irrelevant to explaining compound interest. I would have preferred if you used two siblings having the same career.
You have ignored the higher earning potential of the doctor and the implied higher savings rate.
Quite right, they could have been in the same profession, I just looked for an example of a career that fizzles out early, and one that starts up late. As to the extra earning potential of the doctor, I would imagine Kate Moss might disagree :)