Tell your LAZY CASH to get a JOB!

Have you ever been told by your parents to “Get off Your Lazy A** and go find a job!” Your parents saw you one day sitting on the couch watching TV, and thought maybe it’s about time Junior found a part-time job. You probably ended up taking their advice, as you needed money to pay for things like new clothes and cell-phone bills. Also, your parents didn’t seem to be the generous cash machine they once were. Well here you are, working part time earning some nice extra cash, so you can spend on some “necessary” luxuries.

Hopefully after enough spending, you realize you have extra money left over, so you put it in the bank. At this moment if you have some extra money in your bank account, I would like to congratulate you, You’re Saving. I don’t mean to be sarcastic, but you are doing the number one most important part of being financially HiP.

If you have extra money in your bank account, are you planning to use it within a week, month, or even a year? Well you probably don’t know when you’re going to spend the money, but the point is that your money should not be sitting around just waiting to be spent, it should be WORKING instead.

Yes that’s right Money can work too. How? Well, by earning you interest! Now where can your money go work and earn interest? They can start at your local Savings Account, but not just any savings account, a High Interest Savings Account, such as an ING Direct Savings Account.

You see when your money is just sitting in a regular checking or low interest savings bank account, your money is like sitting on the couch watching TV, doing nothing. Your money is not active, definitely not working for you, and most likely not reaching its full potential.

It’s really simple and fast to open one of these accounts, and they will really help you in the future to continue saving. I always get frustrated when I hear people not opening a High Interest Savings accounts, and have so much cash stuck inside a regular checking account. I guess I can’t be too angry, most people are just not informed. Most banks don’t tell people about these accounts until they are actually asked. The banks would rather talk to you about their new credit cards instead.

Most of the banks in Canada now offer these high interest savings accounts and almost all of them don’t charge any monthly fees and a minimum balance is not required. These accounts are usually online, but they are very safe and secure.

Here are some banks that offer these High Interest Savings accounts:

Bank	Annual Interest Rate
Bank of Montreal	2.60%
HSBC	4.25%
ING Direct	3.75%
Scotiabank	3.50%
Royal Bank of Canada	4.00%

I would recommend opening an account with the bank your already with, but it's perfectly fine to open one with a different bank because it's really simple to transfer funds between banks.

All of those accounts include:

- High Interest paid monthly

- No Monthly Fees

- No minimum balance required

- Total protection and security

So get your lazy cash off the couch and make it start working for YOU!

The RICH Formula

Ever thought that life would be so easy if only there was some sort formula that you can follow to become incredibly rich. You just follow the formula and “pOOf!”, you instantly become unbelievably wealthy. Yes life would be great, but would you believe me if I said that something so absurd actually exists and has been used by the wealthiest people in the world to help create their wealth. Think life can’t be that easy. Think again.

I’m here to introduce to you a formula, so simple, that can make you become amazingly rich. And guess what I’m going to tell you all for FREE.

The formula of riches is called…

Compound Interest

You might of heard about it before, but this mathematically equation can really help everyone become rich.

Here it is:

FV = PV(1 + i/n) ^t*n

What do those letters stand for,

FV = Future Value
PV = Present Value
i = interest rate
t = time
n = how many times the interest is calculated within a certain time (t)

Here’s an example,

You have $10,000 in the bank and earn 5% in interest for the year.
How much interest do you earn for the year,

5% of $10,000 is $500
($10,000 * 0.05 = $500)

So at the end of the year your new balance will equal your initial deposit plus your interest earned, which becomes $10,500.

Then what happens next year when interest is calculated again, you still earn 5% in interest, but how much interest will you earn?

Well, 5% of 10,500 is $525.

In the second year interest earned is $525, but in year one you only earned $500. The reason for the difference, is proof of the work of compound interest. As you see you are actually earning interest on the interest earned from the previous year.

Your new balance will then becomes $11,025.

The great thing about this formula is that you don’t need that much money to get started, the most important part in this formula is TIME.

Do you see were “t” is placed in this formula? It’s an exponent. And if you understand how exponents work you will know that the bigger that number is the bigger the final value will become. You are trying to create the largest final value for yourself, so having a larger “t” value will greatly help increase your final value.

If you’re young, you probably don’t have that much extra money to save, but you definitely have what is most important, TIME.

Becoming a millionaire by the time you retire is really simple, all you need is very little money to start and a lot of TIME.

Here's two different scenarios,
1. 18 year old saves only $100/month until they retire
2. 30 year old saves $200/month until they retire.

If they both earn the same annual interest rate of 10%, by the time they retire at 65, who has more money?

After doing the calculations, the 18 year old will have Over 1 million dollars, $1,103,048 to be exact.

How much would the 30 year old have? Well $685,691.

The 30 year old will not become a millionaire, even though he saved twice as much money every month.

Time Really is Money, so don’t waste it and get started as soon as possible.

Be financially HiP now, so you won’t be financially crippled later.

Read my Magic of Compound Interest post to see the formula in action.

Magic of Compound Interest

If you had 2 choices, which one would you choose to receive the most money?

1. Begin with $0.01 and have it double everyday for 30 days, so on day 2 your amount would be $0.02 and on day 3 it would be $0.04, this continues for 30 days. After the 30 days you collect the money.
OR
2. $100,000

What would you choose? Wait that 1 month or go for the instant $100,000?

If you picked the $100,000, it’s not a bad choice, but definitely NOT the BEST choice.

Let’s figure out how much the first option would be worth after 30 days.

Drum roll please……………………..

$5,368,709.12

Yes that’s right, the amount is Over $5 Million!
You think I’m kidding, take a look at the chart.




















So taking the $100,000 would be nice, but the $5,368,709.12 would be much better! You can see just how much more money the first option produced.

You’re probably wondering how something as little as $0.01 turned into over $5 Million.

It’s all because of the MAGIC and POWER of a formula called COMPOUND INTEREST!

The Purpose of MoneY

Are you young, active and full of energy? Do you own all the latest gadgets and trendiest fashions? Go out almost ever weekend to hang out with friends at the mall or see a movie? But realize at the end of the day…you’re BROKE!

Most of you probably have a part time job or gets an allowance from your parents. You realize that you have this extra money might as well spend it and have some fun. Well, that’s true; one of the main purposes of money is to exchange it for products or services that you want.

But do you know exactly how MONEY WORKS? Think about it, money is so much more than just a piece of paper. You use it all the time, but probably never think twice about what you are actually doing. Using money to buy things becomes so easy for you that it just becomes a natural reflex. You probably never thought about how such a small piece of paper, like a $100 bill, can purchase so many things. I mean if it was just a piece of paper why would anyone sell you products in exchange for it.

Actually, money and more specifically cash, is really just based on trust.
TRUST that when you give someone money when buying something that they can use that money in return to buy something else.
CONFIDENT that anytime in the future you want something you can use money to purchase it.
In the end, without our trust and confidence, it is only physically a piece of paper.

Money is universal. It simplifies everything.

Think of a world without money. That would be pretty awful; how am I going to be able to purchase my next new pair of Adidas sneakers. But seriously, how would you purchase anything, like food?

Here’s an interesting scenario about a world without money:
You walk into the grocery store one day and say to the cashier “I would like to buy this box of Coco Puffs.”
The cashier responds “Ok, can I have something in exchange?”
You then take out a pack of brand new HB pencils. “Will these pencils be alright?”
The cashier looks at you funny...then answers in a snobby tone “Sorry…but we only accept plastic pens”.
You then walk out the store frustrated that you left your pens at home.

Well that was pretty stupid…but I hope you understand my point.
Money can be exchanged for almost anything with no questions asked.

Other than buying stuff, money can do so much more. I will start talking about saving and investing later on, but first you must remember this:

You WORKED HARD for your MONEY!
All I’m asking for you is to take the little time necessary to understand WHAT Exactly are you WORKING FOR!

First PosT!

Hello? Anyone there?

Well this is my first ever post on my first Blog.
I'm new to this so don't judge me; )
I guess I'll start by talking about what this blog is all about.

This blog is dedicated to all the young people out there who don't know anything about finance and investing. We like to call those people Financially Illiterate. And there's a lot of them out there!

I just read this article today about how teens lack financial literacy. It was written on April 5th, 2006, so over a year ago and I doubt much has changed.

Here's the link, http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2006/04/05/financial/f142918D21.DTL

In the article it states that “On average, high school seniors answered correctly only 52.4% of questions about personal finance and economics”. So they passed, but barely:(

One specific stat that stood out and surprised me the most was this:
“Only 14.2 percent correctly said that stocks likely would offer the higher growth over 18 years of saving for a child's education. That was down from 17.2 percent who knew the right answer in the 2004 survey. In this year's survey 44.8 percent thought a U.S. savings bond — one of the most conservative investments — would offer the highest growth.”

Wow….only 14% said that stocks would offer a higher growth over a 18 YEAR period than a savings bond! oucH. I know that stocks can be very volatile and that they sometimes produce negative annual returns, but over 18 years, which is a very long time, the majority of stocks have increased multiple times to produce enormous gains during such a long period.

Well I’ll go further into detail about the stock market later on, but first I would like to say that this blog is about educating the younger generation about making simple, effective and important investment decisions.

Most young people today might think that investing might be too difficult, complicated, or even too boring to get started.

But I am here to prove that investing is actually Simple, Fun, Exciting and Entertaining!

You too can be FINANCIALLY HIP.