The 8th Wonder Of the World

What's Poppin, fellow budgeteers! Are you ready for the ultimate secret to financial security? Here it is: spend less than you earn and invest the rest! Easy-peasy, right? Okay, okay, we know it's easier said than done. But don't worry, we've got your back! Our team is here to help you make a solid plan, stick to your goals, and achieve your financial dreams. So, put down those other boring newsletters and stay with us - we'll make sure you're on the fast track to financial security!" Don't forget to share the knowledge with your friends/family, free to share and read - ALWAYS!

Today we are bringing you:

• 8th Wonder Of The World

• First Card For Non-Frequent Travelers

Today's edition is brought to you by Refside. Fun referee apparel for refs by refs.

 Have you heard about the 8th Wonder of the world, coined by Albert Einstein? No, it's not some mystical place shrouded in mystery and magic - it's something that can seriously supercharge your investments. It's compounding interest! 

This secret sauce is the key to building wealth over time and why you frequently hear people say "Time in the market beats timing the market" Let's dive in to how this works!

What Is Compound Interest?

 Compound interest is like the cherry on top of your investment sundae. It's the interest you earn not just on your initial investment, but also on any interest you've already earned. That means you're making money on top of money - and who doesn't love that?

As the great Benjamin Franklin once said, "Money makes money. And the money that money makes, makes money." Ain't that the truth!

Now, why is compound interest so important when it comes to building wealth? Well, it's simple. The longer your money stays invested, the more time it has to earn interest. And as that interest compounds, your balance grows faster and faster over time. It's like a snowball rolling down a hill - it starts off small, but as it picks up more snow (or in this case, interest), it gets bigger and bigger.

How Does Compound Interest Work?

Now, before your eyes glaze over, let us break it down for you in plain English. Compounding interest is basically interest that earns interest. So, say you invest $10,000 in an index fund FXIAX(one of our favorite), with a 10% annual interest rate. At the end of the first year, you'll earn $1000 in interest, bringing your total balance up to $11000.

But here's where the magic happens: instead of taking that $1000 out and using it to treat yourself to a fancy dinner or a new pair of shoes, you leave it in the account. And the next year, you'll earn interest not just on the original $10,000, but on the $1000 you earned in interest too. So at the end of the second year, your balance will be $12,100.

Now, $12,100 doesn’t seem like a big deal at first, but it becomes a huge deal later. If we leave that $10,000 alone for 40 years, and it compounds annually at 10%, it will grow to over $452,000. And remember, all you put in was $10,000!

See how that works? The longer you leave your money in the account, the more interest it earns, and the more your balance grows. That's the power of compounding interest, and it's why some of the most successful investors in the world have called it the 8th wonder along with Albert Einstein!

How does Compound Interest Grow?

To help you see the power of compounding in action, here's the story of Ben and Joey—two guys who got serious about investing for retirement. They picked a great index fund that averages an annual return of about 11% - just under one of our favorite index funds(FXIAX) which earns an average rate of return of 12.23%.

Ben

• Starts investing at age 21

• Invests $2,400 every year($200 a month)

• Stops contributing money at age 30

• Total amount contributed: $21,600

Joey

• Starts investing at age 30

• Invests $2,400 every year($200 a month)

• Contributes money until age 67 (a total of 37 years!)

• Total amount contributed: $88,800

At age 67, Ben’s investment has grown to over $2.1 million, and Joey’s has grown to more than $1.2 million! Nine years made a difference of close to $1 million.

What is the formula for compound interest?

Now, let's talk numbers. How do you actually calculate compounding interest? Well, there's a formula for that (sorry, math haters). Here it is:

A = P(1 + r/n)^(nt)

In this formula, A is the ending balance, P is the principal amount (what you originally invested), r is the annual interest rate (as a decimal), n is the number of times the interest is compounded per year, and t is the number of years.

But if you don't love math, don't worry - there are plenty of online calculators that will do the heavy lifting for you. Just plug in the numbers and watch the magic happen. Here is one of our favorite calculators to play around with to see the power of compound interest.

How to grow your investments?

We know, you are tired of us saying it: "Spend less than you make, and invest the rest!"

But for more actionable tips, follow these 3 tips:

1. Get in on the investment game early and watch your money grow! Even a small contribution can make a big difference, so don't let the fear of not having enough hold you back. Start small and commit to investing regularly. With time, you'll gain confidence and can ramp up your savings rate for even greater returns. Make your money work for you!

2. Don't overthink your investments - keep it simple and reap the rewards! Index funds are a smart choice! You don't need to be a stock-picking pro to see returns on your money. We've got you covered with some top-notch index fund recommendations, so sit back and let us guide you. The key is to stay focused and not get bogged down in unnecessary complexities. Let's make investing a breeze! Want to start today, open a brokerage account(Fidelity, Schwab, or Vanguard) and invest in their index fund that mimics the S&P 500. We use Fidelity, and their equivalent index fund is FXIAX. Use other brokerage accounts, here are the equivalents - Schwab=SWPPX and Vanguard=VFIAX. Yes, it is that easy!! And if you don't know what an index fund or ETF is, sign up 3 of your friends and get our free money saving guide. Link to share below!

3. Hands off that money! Once you've chosen your funds, let them do the heavy lifting for you. Keep your eyes on the prize and think long-term. The power of compounding interest is truly a wonder to behold, but you've got to give it time to work its magic. Whatever you do, resist the urge to tinker with your investments and stay the course. It may not be easy, but trust us - your future self will thank you for it!

If you're itching to start exploring the world but want to save some serious cash along the way, then you need to check out the Chase Sapphire Preferred Card. This travel credit card is the perfect choice for newbies who want to dip their toes into the world of credit card hacking and earn some sweet rewards without breaking the bank. Here's what you need to know:

• Sign-up bonus: When you sign up for the Chase Sapphire Preferred Card, you'll get a sign-up bonus of 100,000 points when you spend $4,000 within the first three months of account opening. That's a great way to start racking up points and earning valuable rewards right away! Hint: this could be a round-trip ticket to anywhere in the world!

• Points redemption: Points earned on the card can be redeemed for travel, dining, and other purchases at a rate of 1.25 cents per point. That means you can save money on everything from flights and hotels to meals and experiences.

• Travel benefits: The Chase Sapphire Preferred Card also offers a range of travel benefits, including trip cancellation/interruption insurance, baggage delay insurance, and rental car insurance. That can provide you with peace of mind and protect you financially when you're on the road.

• Low annual fee: While there is an annual fee of $95 for the card, the benefits and rewards can more than make up for this cost. Plus, the card has a low barrier to entry, making it a great option for those who are new to travel credit cards.

• Everyday rewards: The Chase Sapphire Preferred Card is also a great option for those who want to earn points and miles on everyday purchases in order to save money on travel. You can earn double points on travel and dining, as well as one point per dollar spent on everything else.

• Tips for maximizing rewards: To make the most of your rewards and benefits with the Chase Sapphire Preferred Card, be sure to use the Chase Ultimate Rewards portal to book travel and take advantage of the card's dining rewards program.

Here is a quick summary of the many ways you can earn points with this fantastic card:

• 5 points per dollar: Travel purchased through Chase.

• 5 points per dollar: Lyft rides (through March 31, 2025).

• 3 points per dollar: Dining, including eligible delivery services and takeout.

• 3 points per dollar: Select streaming services.

• 3 points per dollar: Online grocery delivery, excluding Walmart, Target and wholesale clubs.

• 2 points per dollar: All other travel, including public transit.

• 1 point per dollar: All other purchases.

We’ve found that these categories are relatively broad, too. Dining often includes things like bars and clubs. Likewise, travel includes public transportation, tolls, taxis and just about everything in between. Plus, don’t forget you can earn more on travel purchases when you book flights, hotels and rental cars through Chase Ultimate Rewards.

On top of this, the card offers an annual 10% points bonus on your account anniversary. This is calculated based on the amount of money you’ve spent over the year on your Sapphire Preferred at a rate of 1 point per dollar spent. So if you spent $20,000 on your card, you’d get 2,000 bonus points.

Lastly, Chase makes it extremely easy to redeem your points as they have 14 travel partners and an exceptional portal called Chase Ultimate Rewards where you can redeem your points. Honestly, you can't go wrong with this card!

Overall, the Chase Sapphire Preferred Card is an amazing option for anyone who loves to travel and wants to earn valuable rewards and benefits on their everyday purchases. With its generous sign-up bonus, low annual fee, and valuable rewards, it's a great first travel credit card for anyone looking to explore the world of points and miles.

Read. Fired up to start your investing journey, here is an easy to read article on where to get started including some of our favorite index funds. 

Watch. Didn't have a chance to read this entire email, the concept of compounding interest is so pivotal in your journey of financial security we found a video explaining the concept as well. 

Read. 40-year mortgages have landed, and they are available starting in May! Check out this article to learn more about this new mortgage type!