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We understand the theory behind saving money for our retirement, but how many of us actually do it? In fact how many of us even bother putting any money aside for a rainy day?

Many of us have the same <a href=”http://financialhighway.com/4-reasons-people-fail-to-save-enough-money/”>reasons for not saving money. “There isn’t enough left at the end of the month”, or “a small amount of savings won’t make any difference”. Yet the power of compounding actually makes saving money not only worthwhile, but also amazingly exciting.

If you haven’t yet discovered the magic of compounding then sit tight and prepare to be dazzled!

The Magical Power Of Compound Interest

When asked, many young people think saving is “boring”, or that “interest rates don’t make much of a difference”, yet this couldn’t be further from the truth. In fact the power of compounding can turn a very small amount of money, into a mammoth figure over a period of time, and that is really the key.

So what exactly is compounding and how does it work?

The actual word compound means to grow on top of oneself. Interest is the key to compounding and is what makes it an opportunity not to be missed. Let’s look at how compounding works. When you put money into a savings account you earn interest on the amount you save. For example, if you put $1000 into a savings account with an interest rate of 5% p.a then at the end of the year you’d have $1050.

It doesn’t seem a big difference but look what happens the year after. This time at the same rate of 5% interest you now have $1102.52. What happened?

Well in the first year you earned 5% interest on $1000 but in the second year you earned 5% but on $1050. Instead of the $50 in interest I earn in year 1, I make $52.50 in year 2 as the interest was paid on a bigger amount.

If that $1000 was saved at a 5% interest rate for 30 years and was never added to it would be worth $4321.94!

Now that may not be enough to retire on but can you imagine what would happen if you had saved $1000 each year? The interest would keep being added to a larger figure and would eventually grow explosively.

Like Watching Grass Grow

It’s often been said that watching savings grow through compounding is much like watching the grass grow. It is a process that takes some time but becomes very worthwhile at the end of the road.

If you were to look at a 30 year compound savings plan on a graph then for the first few years the line would be very flat and steady. You would barely be able to see an upward trend, but as the years go by you’d notice the line would suddenly become much steeper before jumping almost vertically.

It was in fact Einstein himself that said, “If man could only grasp the power of compounding he would have mastered the most powerful force in the universe!”.

So how can we use compounding to make our money work harder for us?

Work It Baby!

Start today! – Many of us get into the habit of thinking it’s OK to put off starting to save until later in life. The reality however is that the later you start the less you’ll have at the end of it all.

As an example, if you wanted to retire at the age of 65 years old with a nest egg of $1,932,528.09, if you started at 18 years old and got an interest rate of 8% you’d need to save $4267.01 each year to reach your target, however if you waited until you were 30 years old to start saving you’d need to put away $11,214.97 a year to make your goal figure.

The earlier you start saving the quicker the power of compounding takes hold.

Get the highest interest rate possible- It seems obvious but the higher your interest rate the more money you’ll earn long term. Keep your eyes out and regularly check to see if you’re getting the best interest rate possible.

If someone’s offering you a better deal don’t be afraid to move your money.  Make sure you won’t be penalized by your current savings provider for doing this, and if not then don’t feel guilty about shifting the lot.

Keep adding to the total- We’ve already seen an example of what can happen when money is saved and left to compound over a long period of time. But what happens when you keep adding to your savings is nothing short of miraculous.

The more you save the more cash your interest is being compounded on. Think about it this way, 10% of $100,000 is much more than 10% of $1000 and the more you put away the larger that figure will become.

The Rule of 72

An easy way to work out how the power of compound interest will see a figure double is by using the rule of 72.

You take your interest rate and divide it by 72.  Using our 5% example, you’d take that 5% and divide it by 72 giving you 14.4. That tells you that $1000 will double to $2000 in roughly 14.4 years if you never touch it or add to it.

At a rate of 6% it would take 12 years because 72 divided by 6 is 12.

Although the thought of saving money may not be sexy or inspiring at first, when you consider what the power of compounding can do to your long term outlook the idea becomes a lot more appealing.

The earlier you start the better, and the more you put away the faster compounding will take hold. Someone once said the only way to get rich was to spend less than you earn and to reinvest the difference. Adopt that outlook, combine it with the power of compounding, and your nest egg could end up truly golden.

This article was written by Timothy Ng. You can read more of his work at CreditCardFinder.com.au where he has a number of comprehensive guides to all types of credit cards.

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When it comes to finances, family can add a number of wrinkles to the situation. As you contemplate what’s next for your family, here are some great posts from around the PF blogosphere:

Affordable Nature Getaways for Families

Here on Financial Highway, Myscha shares some great ideas related to family getaways. You don’t have to spend a lot to enjoy family time. My favorite activity is to go camping.

Should You Cosign on a Loan for Your Child?

Over at Fiscally Sound, there is a guest post about cosigning for your child. Even though you may want to help, you still need to be careful. Can you trust your child to behave responsibly?

When Should You Stop Paying For Your Child’s Expenses?

Melissa at Bible money Matters takes a look at when you need to cut the cord. When should you stop <a href=”http://www.biblemoneymatters.com/when-should-you-stop-paying-for-your-childs-expenses/”>covering your child’s expenses and require that he or she take on more responsibility?

Dealing with the Financial Stress of Caring for Aging Parents

The “sandwich generation” is taking care of kids and of their aging parents. Benjamin at the Quizzle blog takes a look at how you can cope with the financial stress that can come with your care of aging parents.

Is Old Age Supplement (OAS) a Right?

Teacherman dives into the <a href=”http://sustainablepersonalfinance.com/old-age-supplement-oas-a-right/”>Old Age Supplement debate over at Sustainable Personal finance. A great read regarding the OAS program.

Should You Buy a Bigger House?

As your family expands, you need to ask yourself whether you should buy a bigger house. Free From Broke shares some insights into the process, and how to decide what to do.

Other Financial Posts

Here are a few more posts for your reading pleasure:

• <a href=”http://money.msn.com/frugal-living/post.aspx?post=e9e21777-2e05-4772-b3cd-ba35851289c8″>Frugality: The right life choice at Frugal Cool
• <a href=”http://www.goodfinancialcents.com/start-financial-planning-investment-business-firm-practice/”>Going Solo — The True Costs of Starting Your Own Financial Planning Firm at Good Financial Cents
• What’s Your Findependence Day? at Boomer & Echo
• <a href=”http://www.canajunfinances.com/2012/02/22/lent-in-finances/”>Lent In finances at THE Canadian Personal finance Blog
• <a href=”http://blog.arborinvestmentplanner.com/2012/02/what-is-the-difference-between-saving-and-investing/?utm_source=fwisp.com”>What is the Difference Between Saving and Investing? at AAAMP Blog
• Does College Prepare You for Self-Employment? at Out Of Your Rut
• What is an Umbrella Insurance and Do You Need One? at Moolanomy

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For parents wishing to provide vacation getaways for their children that are a bit more authentic than your average theme park, Mother Nature can be counted on to step up to the plate. As a rule, children respond well to the natural world, making it the perfect choice for family excursions. Here are four of my favorite ways for families to get back to basics. Affordably.

National Parks:

When it comes to affordable nature experiences for the entire fam, few venues can top a national park. Entry fees can typically be purchased on an annual basis, providing year-round entertainment for snowshoeing enthusiasts, hikers and the summertime family camping crowd. Impressive national parks can be found around the world. Canada and the United States certainly have their fair share, as do Croatia, Ecuador and Jordan.

Caving:

Whether you are working with your teenagers to learn responsible speleology methods, or simply want to check out a well-known tourist attraction like Luray Caverns, caves offer an earthy and impressive way to explore the natural world as a family. They also provide an educational backdrop to reinforce classroom lessons based on the various natural formations found in cave systems around the world. Those interested in touring world-class cave systems will find them in such locations as Lebanon, Slovenia and the southwestern United States.

Rainforests:

Misahualli, Ecuador, the world’s rainforests are a platform for children to have up-close and personal encounters with animals, plantlife and in certain cases indigenous populations that don’t routinely interact with the outside world.

Snorkeling:

Headed to a great beach location? Consider packing or renting snorkeling equipment to fully enjoy your available marine experiences. Snorkeling offers children a chance to interact one on one with coral reefs, tropical fish and in the Northern Marianas Islands, giant blue starfish. It’s also a fun way to explore an eco system they might otherwise have to see in an aquarium. Other fun places to snorkel include the Bahamas, Bermuda at the Caribbean island of St. Kitts.

While it’s all well and good to plan ahead for a family vacation geared towards interacting with the natural world, the truth is it’s possible to visit for a while with Mother Nature on nearly any vacation. Simply make a point to visit parks, check out the walking trails and search out earthier venues regardless of your destination.

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If you’ve searched financial websites you’ve probably noticed a lot of them tout the services of professionals who specialize in “wealth management”.  I don’t know about you but at the moment I’m not particularly concerned with ”wealth management”.  I’m more concerned about “poverty management”.   At some point I’d like to be concerned with “middle income” management.   I need
financial help from a different type of professional or hero, thus the creation of “money Man”.

<a href=”http://freevoucher.com.my/blog/boke/wp-content/plugins/wp-o-matic/cache/a5136_money-Many.jpg” rel=”lightbox[9846]”><img class=”size-full wp-image-9847 alignleft” style=”border-style: initial; border-color: initial;” title=”money Man” src=”http://freevoucher.com.my/blog/boke/wp-content/plugins/wp-o-matic/cache/a5136_money-Many.jpg” alt=”" width=”360″ height=”432″ />

money Man is designed to bring a blue collar approach to money management, or perhaps more accurately, financial survival.   He will help various families through issues faced by people trying to get by in these tough economic times.   One minefield families have to face on occasion is buying a car.   In the initial installment of money Man, money Man will come to the rescue of a family that is car shopping.

This can be a traumatic experience as the family will face such budgetary enemies as “The Closer”, “The finance Guy” and “The Switcher”.   Hopefully you’ll enjoy money Man as he helps the Walton family.  As the Waltons’ will discover the pressure exerted at a car dealership can be nearly that exerted at “Time Share Mountain”.

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The recent spikes in gold prices, and prognostications of doom for the global economy, have many investors considering the benefits of turning to precious metals as an investment. Throughout human history, precious metals (notably <a href=”http://financialhighway.com/gold-%E2%80%93-bad-investment-3-reasons-why-i-don%E2%80%99t-buy-bullion/”>gold and silver) have been used for exchange, and they are thought to be of objective and tangible value.

In a world where fiat currencies change in value without much reference to “backing” or the “market,” there are those that believe that true value can be found in precious metals. While there are ways to invest in precious metals through stocks and funds, there has been an interest recently in physical metals.

How Can You Invest in Physical Metals?

The most obvious way to invest in gold, silver, platinum and other precious metals is to actually get your hands on the metals. Gold and silver, especially, can be bought in coin form, in order to make it easy to transport and store. You can <a href=”http://plantingmoneyseeds.com/should-you-forget-gold-and-hoard-pennies-instead/”>hoard coins, and hope they rise in value. It is also possible to buy bars, wafers and other forms of physical metals.

You can also invest in what are called “certificate” metals. Instead of receiving the physical metal physically, it is stored somewhere else for you, and you are issued a certificate that indicates how much of the metal you own. In some cases, you are merely told how much of the metal you own, while in others you actually receive a listing of the serial numbers corresponding to the bars that are considered yours. It is also possible to use Goldmoney and Bullion Vault to invest in electronic gold and other metals.

Realize, too, that there are metals ETFs that are considered “ownership” in physical metals. However, many die-hard physical metals investors are a little uncomfortable with this concept.

Downsides to Investing in Metals Physically

The upside to physically investing in metals is that you actually have something tangible — that you can touch — to show for your investment. And, if you believe that our current monetary system is on the verge of collapse, you will have the advantage in owning something that many believe possesses intrinsic value. Even if the system doesn’t completely collapse, physical metals can act as a hedge against future inflation, and increase in value.

Realize, though, that there are downsides to investing in physical metals. As you weigh the pros and the cons of investing in precious metals, consider these drawbacks:

• Costs: Whenever you purchase physical metals, whether you buy coins, or invest via certificate, you pay a premium. You will pay more than the market value for the metal. Additionally, if you don’t store it yourself, on site, you will need to pay for storage. Certificate metals usually come with regular storage fees, and you will have to pay for transport if you have it delivered to your location.
• Theft: There is always the possibility of theft when you have precious metals. You run the risk if you store it on site, at your home, and you also run the risk of having the storage facility robbed. If you store your precious metals in a safety deposit box at the bank, make sure that the bank has insurance specifically meant to cover such thefts; FDIC/CDIC insurance won’t do the trick.
• Accessibility: If you store your precious metals at your home, then accessibility isn’t a problem. However, if you have certificate gold stored at EverBank or some other facility, you might not be able to easily access your stash. If an economic and civil apocalypse actually happens, getting access to your physical metals might be difficult. Even if you just decide you want your metals transported to you, you will still have to wait for shipment.
• Liquidity: Precious metals might not be immediately liquid. In many cases, precious metals aren’t recognized as legal tender (the state of Utah in the U.S. is an exception, and not all coins are recognized). So you have to sell them for legal tender, or come to a barter arrangement, if you decide you need to convert your physical precious metals into actual, recognize money.
• Taxes: Most precious metals in physical form are taxed as collectibles. In the U.S., this means that you pay a 28% tax rate on capital gains. So, if your precious metal increases in value, and you sell it, you don’t get special tax treatment like you would with long-term capital gains — no matter how long you had the metal in your possession. (The exception to this rule is jewelry, which isn’t taxed at all, since it is considered heirloom.)

Bottom Line

Adding some physical metals to your portfolio might not be a bad thing. It adds diversity and a measure of security to your holdings. However, you do need to carefully weigh the pros and cons associated with investing in physical metals.

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With the current state of the economy, everyone is looking for innovative ways to maximize savings wherever they can.  Real estate developers, analysts and investors are no different.  They see the value in maximizing return on investment without sacrificing quality.

The modular construction boom is coming to the forefront of the Western Canadian real estate investment market.  Companies like Rose Country Income Fund have adopted the state-of-the-art methods used in modular construction to improve build quality, produce larger and more profitable developments, and best of all – save time and money.

The history of modular, also known as pre-fabricated homes, dates back to the early 1900’s.  The concept was simple — pre-construct a home or building in a factory, then ship it to the development site to have it assembled in a shorter period of time. The industry exploded in the late 1940’s with the end of World War II.  Soldiers returning home to their families were all looking to buy a home.  Demand skyrocketed as traditional construction methods could not keep up.

Over the last decade, the modular construction industry has become highly sophisticated and the quality of the product has increased drastically to a level on par with or better than traditional construction methods.  Pre-fabricated construction methods are now used for commercial buildings, multi-family residences, hotels, motels, and even luxury homes due to the cost savings, quality control and fully customizable options.

The following is an assessment on the values and benefits of modular construction versus traditional building methods.  Let’s explore some of the key advantages that help maximize return on investment for our investors:

• Shorter Build Times – pre-fabricated buildings can be erected in 50-60% less time than traditional on-site construction, leading to cost and time savings, in addition to earlier returns on investment. For example, a modular built condominium can be ready for occupancy in as little as 45 days from the date the site prep and foundation is complete.
• Superior Quality – factory-based quality control standards are the highest in the industry, providing higher quality products versus traditional construction methods. All angles and lengths are exact making finishing less time consuming.
• Economies of Scale – repetition or multiple orders of prefabricated units leads to considerable cost savings on multi-family and commercial development projects, thus increasing ROI.
• Reduced Site Labour Requirement – the erection and finishing of a modular building requires less time and workers than traditional construction, producing added cost and time savings. This can be a significant benefit when building in a tight labor market where competition for skilled labor is at a premium.
• “Green” Construction – highly efficient factory production produces significantly less waste and is better for the environment.
• Safer Construction – modular construction sites have proven to be significantly safer than traditional on-site building especially in inclement weather conditions.

All of the benefits add up to one thing – a superior investment opportunity.  Every analyst and investor wants to maximize their return on investment, and with modular construction we need not sacrifice quality to produce a significantly higher return.

This guest post is by Tim Whitehead from RC Fund Management. For more information, you contact RC Fund Management today.

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The Australian dollar climbed to the highest price in more than in seventh months against the Japanese yen as speculations about an interest rate cut receded, while general mood on the forex market was supportive for higher-yielding currencies. The Australian currency was down versus the US dollar and the euro.(…)
Read the rest of <a href=”http://www.topforexnews.com/2012/02/25/audjpy-reaches-seven-month-high-as-rate-cut-isnt-expected/”>AUD/JPY Reaches Seven-Month High as Rate Cut Isn’t Expected (137 words)

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The Great Britain pound jumped today, reaching the highest rate in more than five months versus the Japanese yen, after the report showed that the UK economy shrank last quarter on a quarterly basis, but expanded on an annual basis.(…)
Read the rest of <a href=”http://www.topforexnews.com/2012/02/24/pound-climbs-with-annual-gdp-growth/”>Pound Climbs with Annual GDP Growth (127 words)

Posted on <a href=”http://www.topforexnews.com/”>forex News.

The South Korean won gained today as positive data from Europe was followed by some really good numbers from the United States, including new home sales and consumer sentiment, that increased appeal of riskier currencies.(…)
Read the rest of <a href=”http://www.topforexnews.com/2012/02/24/won-gains-on-positive-data-from-europe-usa/”>Won Gains on Positive Data from Europe & USA (75 words)

Posted on <a href=”http://www.topforexnews.com/”>forex News.

US dollar is softer today as general risk appetite eliminates the need for safe haven currencies. Optimism about the future is high, and many forex traders are looking forward to improvements in the global economy.

(…)
Read the rest of <a href=”http://www.topforexnews.com/2012/02/24/us-dollar-softer-on-risk-appetite/”>US Dollar Softer on Risk Appetite (147 words)

Posted on <a href=”http://www.topforexnews.com/”>forex News.