Client Examples and Investing Basics

 

Ace

Interview with Michelle Melendez @ Blossom Inner Wellness.  And more.

4:10. Buy an asset.  His net worth went up.  

He looks at the time value of money for example the discount rate if I buy a taxing certificate there's a discount rate is my discount rate is where I'm going to make my money the moment I buy is where I make my money.

6:44. Net Present Value on Wikipedia.  This gentleman ode the IRS $100,000 and they were garnishing his paycheck well you only make so much money right so the garnishment was like 20% of his pay could have been 10 it should be 10 if not and you're filing returns you can make it 10%.  But because the stress of the debt got to him he decided to pay the entire $100,000.  What does that look like compared to the use of capital with the other gentleman where he took the cash and instead of paying off the debt the IRS debt is unsecured also the one man had a wage garnishment but then decided to pay off the entire principal $100,000 the wage garnishment was a heck of a payment plan if you ran the numbers on it the interest rate was probably far less than his credit cards.  He really destroyed the net present value of that capital.

JIM, 9:00. Annette present value is a thing you do with every time every day of your life it states that if you had $10,000 today and you had 12% inflation in one year that $10,000 is worth $8,929 so if you and 5 years that same $10,000 was $5,674 in 10 years it's worth 3,200 value so if you were to get $8,900 a year from now that would be worth $10,000 to you today.  So that's what you would get today if you had it so it's just a matter of pulling the cash flow back into current dollar so it's making all of the predictions and all the things that you have based on the assumptions that you're making and gives you the current so you can change it you can say well what if it was a 5% inflation rate and then you can do that number as well so $10,000 today would be worth $9,500.  5 years from now it would be worth $7,800 10 years it would be worth $6,100 accounts use this to look at projects and pull the cash flows back into current. To determine what's the best course of actions to have.