Building Your Nest Egg – Learn How Money Works | Fidelity 401k

by jaredtrideout

Source: ezinearticles.com

After a long career working in the technical field and some years as a musician, I became involved with a rather unconventional insurance and financial company. Their focus was to teach people everything banks and insurance companies didn’t want you to know. I became licensed to sell life insurance and mutual funds. Much of our business was from people who had bundled insurance products.

The only life insurance product we sold was term life insurance. Our only investment products was mutual funds.

The company motto was buy term and invest the difference. After many years I had finally became exposed to knowledge of how money works. Before I gained this knowledge, I had worked for seventeen years with a very good company. Due to my lack of knowledge about how money worked, I got nowhere near the return I should have from my 401K. Here is a review of some of what I learned and what every one should know.

The first thing you need to know is how invested money grows. There is a simple, <a href="http://www.

fidelity401k.net”> fidelity 401k , rule of thumb called the rule of 72. Divide 72 by the rate of interest and you will find how many years it takes your money to double. At the bank these days you are lucky if you can get 2% on a savings account. If you divide 72 by 2 you get 36. In 36 years $1000 will become $2000. Divide 72 by 12 and you get 6. In 36 years $1000 will double six times and becomes $64,000. Give it 12 more years to 48, fidelity 401k, years and it becomes $256,000. As you can see, time is an essential ingredient in this formula for financial success.

Are there places to get 12% return on an investment? Over the short term no. However, with all the ups and downs in the economy, including the great depression and the many recessions, over a fifty, fidelity 401k, year period there are investments that have returned 12% or better. These results have been achieved by investing in the stock market. Honest financial people have to tell you that past performance is no guarantee of future performance. In other words, history may not repeat itself.

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