Every $100 you invest becomes $10,000 to spend later

Yes, it's true.

Children need to know early that there are ways to grow savings to be able to afford what they want. If they knew $100 invested will grow to $10,000 later, they will see why it is worth investing. Right now, saving $100 in a bank account paying 1.2% does NOT offer much attraction.

Here is how $100 becomes $10,000. In year 1, your investment of $100 in a tax-FREE account like a stock mutual fund Roth IRA may not grow to $113. Don't sell the shares. They will go up. In the year 5—$182, year 10—$330, year 20—$1,089, year 30—$3,595, year 39—$10,529.

Children know someone owns their favorite store--ToysRUs, Sports Authority, or Walmart. Now they own part of the store. They make money when other people buy from their store. This is how they can understand how they earn money. At night, there are children all over the world buying at their store. It works during the day too. Every time someone buys, they earn a penny.

“We continue to make more money when snoring than when active.”

Warren Buffett, one of the world’s best investors berkshirehathaway.com

The growth of the $100 to $10,000 over time by itself is a “miracle” that can inspire even adults. In fact, if we updated this phenomenon at every age, teens might want to calculate how fast they could save enough for a car or game console. Teens could figure out in math class with an Internet future value calculator that by investing $100 a month from their jobs, they could have $1,200 in 1 year or $4,000 in 3 years. As they start their first job, young adults could have $25,000 in 5 years to buy whatever they need and pay off their student loans. Most don’t.

Of course their parents have to cooperate by not short-circuiting this lesson by buying the items for the kids. Teens need to understand where parents got the money to buy things. We aren’t teaching them where the money comes from. We aren’t teaching them about investing since Many of Us don’t wait till we have the money to buy things. We just use the “magic” of borrowing. They never learn how to problem-solve with money and they've never learned how to defer what they want.

How did we get here? There is now $915 billion in U.S. credit card debt. It all started when Bank of America launched the nation's first general-purpose credit card in 1958. It simply dropped 60,000 of them in a mass mailing to residents in Fresno, California. The bank hoped to attract customers with a new type of "revolving" credit line, which could be used for purchases everywhere and paid off over time. Every vet wanted a house, car, and fridge immediately to make up for the lost time of WW2.

Revolving credit accounts allow us to buy without thinking. Now, we don’t even think about whether we really need the item. We don’t consider the total cost either. Credit finance charges can KILL you slowly--like smoking. We are giving away our futures when we use credit. It works just like the “miracle” of compounding—only in reverse. We pay off our credit cards over 30 or 40 years because we can’t stop using them. Some will pay 5 times the price of the item over time.

For example: You will have to pay $161 per month for 10+ years to pay off your debt of $10,050 at 15%. You will spend at least $19,360 to pay off that $10,050. (If your rate is 25%, you will pay $25,080 for $10,050.) You pay almost double for that $10,050!

That’s not all—THE REAL COST IS MORE!

Think of it. If you did not have to use that $161 each month to pay the $10,050 in debts, you would be able to use the $161 per month to make money. You could have made about $37,036 in the 10 years using a stock mutual fund. So the REAL cost of that $10,050 debt is actually $56,396!! The lender gets the $19,360 (to pay the debt over time) and you gave up earning $37,036 from the $161 payment per month for 10 years. That is enough for a down payment on a house!

Most people buy things they don’t need on credit and pay the minimum at rates that hit 29% for some. So we give up our future: house down payment, education funding, business start up, or retirement funding. Unfortunately, many people never pay off the whole debt. It is $915 billion—most on the shoulders of debt addicts.

Mississippi proposes to do something to break the cycle of debt. Following the success of Child Trust in England, MS will create a $500 investment account for all children born in the state. The initial endowment of $500 would be provided by the state to each newborn, and total additional state-tax-deductible contributions of up to $2,000 per year could be made by family members, friends, churches, charities, and others. Child account holders could use the accounts for any purpose at age 18 - including a college education, home ownership, or investing in a small business.

Our members do the same using existing accounts. See our FREE Guide: theinsidersguides.com/freeguide.html