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Thoughts of a closet investor

Marty's Musings

Marty Pay, MBA, CLU, LUTC-F.

For a lot of people, finance and investing are like watching paint dry. In my finance classes I liked to make it a competitive sport, against yourself and Father Time.

I'd talk night one about one of Al Einstein's favorite subjects, the "eighth wonder of the world:" The time value of money! This worked every time. By the break or the next class easily three quarters of the students brought in their plans or asked me about putting one together. I felt like a magician, but the magic was in the numbers and how they can work for you or against you.

If you doubt that time value of money can work against you, take a look at a credit card statement. Besides paying an interest rate that would choke a horse, look at the explanation in the corner. If you pay the minimum payment, you'll be paying back until the day after the next ice age! If you're like many of us who don't use a credit card for more than 30 days, look at your mortgage statement.

Since most of us don't have hundreds of thousands of dollars laying around to pay off a house, we finance our home. The difference between today's rate and those a couple of years ago can add thousands of dollars to the ultimate bill and $500-$1,000 a month in monthly payments. Again, the time value of money!

Can a simple $100-$200 dollar investment in a retirement account make a difference? Take another look at that credit card statement to get your answer. Get the money working for you. One thing that always amazes me is how many people don't take advantage of matching funds on a retirement plan. If your company is offering say 4% matching funds, you've just made 100% on your money up to that 4%. You want to see magic, watch that pool of money take off after 20-30 years!

There are plenty of good financial advisors and accountants in Tehachapi who can help make the magic for you. Remember Al said the eighth wonder of the world can either work for you or against you, you get to decide. (P.S. No amount is too small to get that ball rolling for you.)

Marty Pay has an MBA and a CLU, he has been doing and teaching financial planning for over 50 years. He can be reached at Farmers Insurance in Tehachapi (661) 822-3737.